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Equity Market: An Introduction

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Language:  English
This book covers all aspects of the equity market including its context, instruments, investors, primary & secondary markets, and valuation.
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The equity market is a prominent member of the capital market. The only other member is the long-term debt market. The money market does not feature here, but it does pair with the bond market to form the debt market. The equity market plays a significant role in the economy. It provides perpetual capital (= ordinary / common shares and in some countries perpetual preference / preferred shares exist) and long-term capital (in most countries = the definition of preference / preferred shares). Long-term capital is essential for the development of commerce and industry and infrastructure, and no country can develop sustainably at a high level without the existence of entrepreneurs who have access to long-term / perpetual capital. Capital is provided in the primary equity market and traded in the secondary equity market. The latter is more efficient if the market is formalised, listing requirements are adequate and surveillance of members and listed companies is effective.

  1. Context & Essence
    1. Learning outcomes
    2. Introduction
    3. The financial system in brief
    4. The money and bond markets in a nutshell
    5. Essence of the equity market
    6. Statutory backdrop to shares and share market
    7. Equity derivatives
    8. Summary
    9. Bibliography
  2. Instruments
    1. Learning outcomes
    2. Introduction
    3. Ordinary shares
    4. Preference shares
    5. Negotiable instruments representing equity
    6. Summary
    7. Bibliography
  3. Investors
    1. Learning outcomes
    2. Introduction
    3. Ownership distribution
    4. Motivation for holding equity
    5. Statutory environment for investors
    6. Measures of return
    7. Other concepts of return
    8. Risks faced in holding financial assets
    9. Risk predisposition
    10. Measurement of risk in the financial markets
    11. Relationship between risk and return
    12. Risk and return: the record
    13. Summary
    14. Bibliography
  4. Primary market
    1. Learning outcomes
    2. Introduction
    3. Economic function of primary market
    4. The law, the equity exchange and listing
    5. Motivation for listing (advantages)
    6. Disadvantages of being listed
    7. Listing requirements
    8. Types of companies that list
    9. Listed products other than shares
    10. Methods of listing
    11. Steps involved in a listing
    12. The prospectus
    13. Underwriting of a share issue
    14. Other sources of primary issue of listed equity
    15. Summary
    16. Bibliography
  5. Secondary market
    1. Learning outcomes
    2. Introduction
    3. Definition
    4. Significance of secondary market
    5. Structure of secondary equity market
    6. Participants in secondary market
    7. Trading system: automated trading
    8. Mechanics of dealing (from point of view of client)
    9. Clearing and settlement
    10. Cost of dealing
    11. Equity market indices
    12. Equity market efficiency
    13. Summary
    14. Bibliography
  6. Valuation
    1. Learning outcomes
    2. Introduction
    3. Balance sheet valuation approach
    4. Discounted cash flow approach
    5. Relative valuation approach
    6. Equity valuation, inflation and interest rates
    7. Summary
    8. Bibliography
  7. Endnotes
Pierre makes things look easy and understandable. Thank you.
About the Author

Prof. Dr AP Faure

Alexander Pierre Faure graduated from Elsenburg Agricultural College after school and went on to Stellenbosch University where he graduated with BA (Commerce), Hons BA (Economics), MA (Economics), and PhD (Economics).

He also successfully completed the Stockbroker Examination Requirements at Witwatersrand University (and is a registered Stockbroker - presently non-broking status).

He first worked for the central bank, where he was involved in compiling the monetary statistics (money stock and sources of change, and money market liquidity analysis) and later in the execution of monetary policy.

His career after central banking included private sector banking (the recipient of monetary policy), stockbroking (influenced by monetary policy) and interest rate analysis (reading monetary policy).

After his private sector experience, he became an academic and held the positions Investec Chair in Money and Banking (at Rhodes University and the University of Fort Hare) and Foord Chair in Investments (at Rhodes University).

After retirement he was appointed Professor Emeritus at Rhodes University, and remains engaged in research.  

He has published widely, including books and papers.

He also served on a number of boards of directors, holding the positions of Non-executive Director and Managing Director.