ASSIGNMENT

Assignment



Assignment

Discuss the role of the stock market in the UK financial system.

From last several years, UK's financial system is the largest and most advanced system in the world, which corresponded to the leading place of the British Empire in the world economy. After Second World War, Britain gradually handed over former position in world production and trade, but preserved, and in 1970-1980's, even strengthened the role of international financial center (Adler, 2007, p41). By the volume, of international financial transactions of the United Kingdom market is unparalleled. London Stock Exchange is considered the oldest stock exchange in the world. Typically, the year it was founded in 1773 considered. It was then, in any case, the term itself first appeared London Stock Exchange. Exchange takes 3-4 place in the world by market capitalization and turnover, while it does not know the equal in terms of turnover of foreign stocks.

The share of the UK accounting for more than 40% of trade volume in shares of foreign issuers (that is, foreign stocks traded across national markets), a third of foreign exchange, over 40% of the OTC derivatives market, the fifth part of the international bank lending, 60% primary and 70% of secondary Eurobond market. London is a leading center of trade in precious metals. England accounts for one fifth of all premiums collected in marine insurance. The country occupies first place in the world in a positive balance of trade in financial services - about $ 50 billion in 2006, with a large margin of Switzerland's second-place (Adler, 2007, p41). Among developed countries, Britain has traditionally been the third-largest capitalization of domestic companies - nearly $ 4 trillion. However, the ratio of dollars "capitalization / GDP" is (approximately 150-160%) among the seven largest countries in the first place. This is associated with a traditionally high level of shareholder culture in this country, protection and respect for the rights of shareholders, a high proportion of shares in free float (Gunasekarage, 2001, p17).

The most important indicator of price movements of shares of issuers is British FTSE 100 index (pronounced footsie). As the name suggests, it is calculated based on shares of the top 100 issuers. However, it should be borne in mind that, given the tradition of paying decent dividends British companies investing in British stocks provide a highly affordable average annual dividend yield, compensating for price increases - about 3% on average for ...