FINANCIAL MANAGEMENT

Financial Management



Financial Management

Introduction

The last two decades have witnessed phenomenal growth of financial markets in the world, including foreign exchange markets, the Euro markets and international bond markets. For example, the daily volume in foreign exchange markets is more than a trillion dollars, which is equivalent to almost 10 times the daily volume of commercial transactions in both goods and services in the global arena. This importance is derived from transactions with multinational companies, especially financial intermediaries (brokerage firms, banks and exchange houses), operating in mature markets such as London, New York, Tokyo, etc.. and emerging markets such as Singapore, Korea, Brazil or Mexico.

Discussion

NASDAQ

NASDAQ is an index (basket of securities) in the U.S. representing approximately 5,000 companies in all technological fields. It uses a smaller index with only the 100 largest companies and the NASDAQ 100 (Heckman, 2001).

NASDAQ traders are not linked to a specific physical point. Since transactions are done electronically, traders may be located anywhere on the planet compared to the New York Stock Exchange for example. There are two Nasdaq markets (www.nasdaq.com):

The Nasdaq Small Cap Market, with approximately 1500 firms for contracts for smaller values.

The Nasdaq National Market, with more than 4000 values for larger capitalizations. Negotiation is the basis of price action. The Nasdaq has about 600 traders who buy and sell stocks over 5000 companies. Unlike the NYSE, for example, where prices are set by auction, Nasdaq prices are set by negotiations where both parties win.

NYSE

Purchase orders and sales are channeled through brokerage houses, which moved to the park orders through electronic or telephone. Once the members of the firm brokers receive them, then they are executed, or can be executed by a member of the Stock Exchange when the broker of the firm is too busy. In principle the orders are executed ...