E-finance 网络金融

2010.2-至今，桂林理工大学讲师。2010年回国以后，担任电子商务专业4个年级专业课讲师；担任电子商务专业必修《电商概论》主讲，《网上创业》主讲，《PhP+Mysql》主讲；双语《usability》主讲；双语《Web Project management》主讲；双语《管理学》主讲。

“网络金融”是指以技术创新为主导动力，以质量型增长为内涵的新经济形态。它是网络技术与金融相互结合的产物。从狭义上理解，网络金融是指以金融服务提供者的主机为基础，以因特网或者通信网络为媒介，通过内嵌金融数据和业务流程的软件平台，以用户终端为操作界面的新型金融运作模式；从广义上理解，网络金融的概念还包括与其运作模式相配套的网络金融机构、网络金融市场以及相关外部环境。其内容包括电子货币、网络银行、网上支付、网络证券和网络保险等。
本书通过案例详细阐述了传统金融行业的投资、货币概念和银行产品，投资理财的核心思想以及对网络银行系统的分析。在E-finance方面加入了现代比特币和E-stock理论研究，是高等学校电子商务专业本科生双语教学的先锋教材。

目 录
Contents
1 Introduction 1
1．1 E-finance Technologies in Payment Services 1
1．2 History of E-finance in US 2
1．3 Two Questions 3
1．4 Debit Cards 4
1．5 The E-finance Impact on Financial Markets 7
1．5．1 Stock Markets 7
1．5．2 Foreign Exchange Markets 9
1．5．3 Bond Markets 10
1．5．4 Concluding Remarks 10
2 Bitcoin： A Peer-to-Peer Electronic Cash System 11
2．1 What Is a Bitcoin ? 11
2．1．1 Introduction 11
2．1．2 Creation of Coins 12
2．1．3 Sending Payments 12
2．1．4 Preventing Double-Spending 14
2．2 Anonymity 15
2．3 Where to See and Explore? 15
2．4 How Many People Use Bitcoin? 16
2．5 Why Does My Bitcoin Address Keep Changing? 17
2．6 Network 18
2．6．1 The Steps to Run the Network 18
2．6．2 What Is Mining? 18
2．6．3 Simplified Payment Verification 20
2．6．4 Combining and Splitting Value 20
2．7 Security 20
2．7．1 Privacy 20
2．7．2 There Are Two Questions 21
2．7．3 Criminal Activities 22
2．7．4 Theft 23
2．8 Taxation and Regulation 24
2．9 Conclusion 25
3 Capital Markets and Financial Services 26
3．1 What Is Investment Capital? 26
3．2 Characteristics of Capital 26
3．2．1 Sources of Capital 27
3．2．2 Users of Capital 29
3．3 The Role of Financial Instruments 30
3．3．1 Debt 30
3．3．2 Equity 30
3．3．3 Investment Funds 31
3．3．4 Derivatives 31
3．4 The Role of Financial Markets 31
3．4．1 Stock Exchanges around the World 32
3．4．2 Exchange Memberships 33
3．5 Governing Bodies and Administration 33
3．5．1 Boards of Directors 33
3．5．2 Statutory Responsibilities 34
3．5．3 Future Trends 34
3．6 Dealer Markets the Unlisted Market 35
3．6．1 The Unlisted Equity Market 35
3．6．2 The Fixed-Income Marketplace 36
3．7 The Role of Financial Intermediaries 36
3．7．1 Size and Characteristics of the Securities Industry Today 37
3．7．2 Financing Securities Houses 41
3．7．3 Principal and Agency Functions 42
3．7．4 Dealer， Principal and Agency Transactions 43
4 Financing， Listing and Regulations 45
4．1 Financing 45
4．1．1 Government Financing 46
4．1．2 Corporate Finance 48
4．2 Corporations Financing Process 48
4．2．1 The Dealer’s Advisory Relationshipwith Corporations 49
4．2．2 The Method of Offering 49
4．3 Advice on the Security to Be Issued 51
4．4 The Prospectus 52
4．4．1 The Short Form Prospectus System 55
4．4．2 Internet Prospectus 55
4．5 Other Documents and Sale of the Issue 56
4．6 The Financing Process 57
4．6．1 After-market Stabilization 59
4．6．2 Other Methods of Distribution 60
4．6．3 Junior Company Distributions 60
4．7 Options of Treasury Shares 61
4．7．1 The Listing Process 61
4．7．2 Advantages of Listing 61
4．7．3 Disadvantages of Listing 62
4．7．4 Disadvantages of Listing 62
4．7．5 The Listing Application 62
4．7．6 Regulations for Listed Companies 63
4．7．7 Withdrawing Trading Privileges 63
4．8 Temporary Interruption of Trading 63
4．8．1 Delayed Opening 63
4．8．2 Halt in Trading 64
4．8．3 Suspension of Trading 64
4．9 Cancelling a Listing (Delisting) 64
4．10 Regulation and Investor Protection 64
4．10．1 Underlying Principles of Provincial Securities Legislation 64
4．10．2 Registration 65
4．10．3 The National Registration Database (NRD) 66
4．11 Designated Non-trading Employees 66
4．12 Securities Firms 66
4．13 Know Your Client Rule 67
4．14 Breach of Fiduciary Duty 67
4．15 Public Company Disclosure and Investor Rights 70
4．16 The Purchasers’ Statutory Rights 71
4．17 Continuous Disclosure 72
4．18 Takeover Bids 73
4．19 Early Warning Disclosure 75
4．20 Insider Trading 75
4．21 Investigation and Prosecution 76
5 Corporations and their Financial Statements 77
5．1 Types of Business Structures 77
5．2 Incorporated Businesses 78
5．2．1 Government Approval 78
5．2．2 Choice of Jurisdiction 78
5．2．3 Public and Private Corporations 79
5．2．4 The By-laws 79
5．2．5 Voting and Control 79
5．2．6 Shareholders’ Meetings 80
5．2．7 Voting Trusts 80
5．2．8 Directors 81
5．2．9 Officers 82
5．2．10 Financing the Corporation 82
5．2．11 Advantages of Incorporation 85
5．2．12 Disadvantages of Incorporation 86
5．3 Understanding the Balance Sheet 86
5．3．1 General Form of the Balance Sheet 87
5．3．2 Classification of Assets 88
5．3．3 Classification of Liabilities 94
5．3．4 Shareholders’ Equity 97
5．4 Understanding the Earnings Statement 98
5．4．1 What It Shows 98
5．4．2 Structure of the Earnings Statement 99
5．4．3 The Operating Section (items 28 to 34) 100
5．4．4 Non-Operating Section (item 35) 102
5．4．5 The Creditors’ Section (items 37and 38) 102
5．4．6 The Owners’ Section (items 40 to 45) 102
5．5 Understanding the Retained Earnings Statement 104
5．6 Understanding the Cash Flow Statement 105
5．6．1 Introduction 105
5．6．2 Operating Activities 106
5．6．3 Financing Activities (items 51 to 54) 107
5．6．4 Investing Activities (items 55 to 57) 107
5．6．5 Change in Cash Flow (items 58 to 60) 107
5．6．6 Supplemental information (items 61 to 62) 108
5．7 Other Information in the Annual Report 108
5．7．1 Footnotes to the Financial Statements 108
5．7．2 The Auditor’s Report 109
5．8 Specimen Financial Statements 110
6 Fixed-income Securities 115
6．1 Definitions 115
6．1．1 Fixed-income Securities 115
6．1．2 Bonds and Debentures 115
6．1．3 Interest 115
6．1．4 Face Value and Denomination 116
6．1．5 Price and Yield 116
6．1．6 Term to Maturity 117
6．1．7 Liquid Bonds， Negotiable Bonds， and Marketable Bonds 117
6．2 The Rationale for Issuing Fixed-Income Securities 117
6．2．1 Financing Operations or Growth 118
6．2．2 Financial Leverage 118
6．3 Size of the Fixed-income Market 118
6．4 Features and Provisions of Bonds 119
6．4．1 Call or Redemption Feature 119
6．4．2 Sinking Funds and Purchase Funds 120
6．4．3 Extendible and Retractable Bonds 121
6．4．4 Convertible Bonds and Debentures 121
6．4．5 Protective Provisions 124
6．5 Types of Fixed-income Securities 127
6．5．1 Government of Canada Securities 127
6．5．2 Provincial Government Securities and Guarantees 130
6．5．3 Municipal Debentures/Installment Debentures 132
6．5．4 Corporate Bonds 133
6．5．5 Other Types of Fixed Income Securities 136
6．5．6 Reading Bond Quotes 138
6．5．7 The Bond Rating Services 139
6．6 Bond Pricing Principles 140
6．6．1 The Use of Present Value 140
6．6．2 Calculations for Fixed-Income Securities 143
6．6．3 Theories of Interest Rate Determination 145
6．6．4 Fixed-Income Pricing Properties 148
6．6．5 The Yield Curve and Bond Switching 153
6．7 Delivery， Settlement and Regulation 156
6．7．1 Bond Delivery 156
6．7．2 Clearing and Settlement 156
6．7．3 Regulation of Bond Trading 157
6．7．4 Accrued Interest 158
6．8 Bond Indexes 160
6．8．1 Uses of Bond Indexes 160
6．8．2 Scotia Capital Canadian Bond Market Indexes 160
6．8．3 Merrill Lynch Global Indexes 161
6．8．4 Other Index Providers 161
7 Equities 162
7．1 Common Shares 162
7．2 Rights and Advantages of Common Share Ownership 162
7．2．1 Capital Appreciation 163
7．2．2 Dividends 163
7．2．3 Voting Privileges 167
7．2．4 Tax Treatment 168
7．2．5 Marketability 170
7．2．6 Stock Splits and Consolidations 170
7．2．7 Reading Stock Quotations 172
7．3 Preferred Shares 173
7．3．1 The Preferred’s Position 173
7．3．2 Preference as to Assets 173
7．3．3 Preference as to Dividends 174
7．3．4 Features of Preferred Shares 174
7．3．5 Special Protective Provisions 177
7．3．6 Why Do Companies Issue Preferred Shares? 178
7．3．7 Who Buys Preferred Shares? 178
7．4 Types of Preferreds 179
7．4．1 Fixed Rate (or Straight) Preferreds 179
7．4．2 Convertible Preferreds 179
7．4．3 Retractable Preferreds 182
7．4．4 Floating Rate Preferreds 183
7．4．5 Foreign-pay Preferreds 184
7．4．6 Canadian Originated Preferred Securities (COPrS) 184
7．4．7 Other Types of Preferreds 185
7．5 Cash and Margin Accounts 186
7．5．1 Cash Accounts 186
7．5．2 Margin Accounts 188
7．6 Short Selling of Equities 190
7．6．1 What Is Short Selling? 190
7．6．2 How is Short Selling Done? 190
7．7 Equity Transactions 194
7．7．1 An Agency Transaction?Trading Procedures 194
7．7．2 Settlement Procedures 195
7．7．3 Other Transaction Models 196
7．8 Buy and Sell Orders 197
7．8．1 Market Order 197
7．8．2 Limit Order 197
7．8．3 Day Order 197
7．8．4 Good Till Cancelled (GTC) Order 197
7．8．5 All or None Order (AON Order) 197
7．8．6 Any Part Order 198
7．8．7 Good Through Order 198
7．8．8 Stop Loss and Stop Buy Orders 198
7．8．9 The Preferential Trading Rule and the Pro or N-C Order 199
7．9 Stock Indexes and Averages 199
7．9．1 What Is a Stock Index? 199
7．9．2 What Is an Average? 200
7．9．3 Canadian Market Indexes 200
7．9．4 U．S． Stock Market Indexes 204
7．9．5 International Stock Market Indexes and Averages 207
8 Derivatives 209
8．1 What Is a Derivative? 209
8．1．1 Features Common to All Derivatives 209
8．1．2 Derivative Markets 210
8．1．3 Key Differences Between Exchange-traded and OTC Derivatives 211
8．2 Types of Underlying Assets 213
8．2．1 Commodities 213
8．2．2 Financials 214
8．3 Who Uses Derivatives and Why Do They Use Them? 215
8．3．1 Individual Investors 215
8．3．2 Institutional Investors 216
8．3．3 Corporations and Businesses 217
8．3．4 Derivative Dealers 218
8．4 Options 219
8．4．1 Key Terms and Definitions 219
8．4．2 Option Exchanges 223
8．4．3 Reading an Options Quotation 223
8．4．4 Basic Option Strategies for Individual and Institutional Investors 224
8．4．5 Basic Option Strategies for Corporations 232
8．5 Forwards 233
8．5．1 Futures： Key Terms and Definitions 233
8．5．2 Futures Exchanges 235
8．5．3 Reading a Futures Quotation 235
8．5．4 Basic Futures Strategies for Investors 236
8．5．5 Basic Futures Strategies for Corporations 238
8．6 Rights and Warrants 240
8．6．1 Rights 240
8．6．2 Warrants 244
9 Hedge Funds 246
9．1 Overview of Hedge Funds 246
9．1．1 What Is a Hedge Fund? 246
9．1．2 Comparing Hedge Funds to Mutual Funds 246
9．1．3 Who Can Invest in Hedge Funds? 246
9．1．4 History of Hedge Funds 248
9．1．5 Size of the Hedge Fund Market 249
9．2 Portfolio Theory and Hedge Funds 249
9．2．1 Portfolio Theory 250
9．2．2 Measuring Portfolio Performance 252
9．3 Benefits and Risks of Hedge Funds 254
9．3．1 Benefits of Hedge Funds 254
9．3．2 Risks Associated with Hedge Funds 255
9．3．3 Due Diligence 259
9．4 Hedge Fund Strategies 261
9．4．1 Relative Value Strategies 261
9．4．2 Event-Driven Strategies 264
9．4．3 Directional Funds 265
9．5 Funds of Hedge Funds 268
9．5．1 Advantages 268
9．5．2 Disadvantages 269
9．6 Principal-protected Notes 270
9．6．1 What Is a Principal-Protected Note? 270
9．6．2 Costs 271
9．6．3 Risks 271
9．6．4 Choosing a PPN 272
9．7 Tracking Hedge Fund Performance 273
9．8 Conclusion 273
10 E-mutual Funds 274
10．1 Advantages of Investing in Mutual Funds 274
10．1．1 Low Cost Professional Management 274
10．1．2 Diversification 274
10．1．3 Variety of Types of Funds/Transferability 274
10．1．4 Variety of Purchase and Redemption Plans 275
10．1．5 Liquidity 275
10．1．6 Ease of Estate Planning 275
10．1．7 Loan Collateral 275
10．1．8 Eligible for Margin 275
10．1．9 Various Special Options 275
10．2 Disadvantages Associated with Mutual Funds 276
10．2．1 Costs 276
10．2．2 Unsuitable as a Short-Term Investment 276
10．2．3 Unsuitable as an Emergency Reserve 276
10．2．4 Professional Investment Management Is Not Infallible 276
10．2．5 Tax Complications 276
10．3 The Structure of Mutual Funds 276
10．3．1 Trust versus Corporation 276
10．3．2 The Organizational Structure of a Mutual Fund 278
10．3．3 How Mutual Funds Units or Shares Are Priced 279
10．3．4 Charges Associated with Mutual Funds 280
10．4 Redeeming Mutual Fund Units or Shares 284
10．4．1 Calculating Redemption/Selling Price 285
10．4．2 Tax Consequences 285
10．4．3 Buying by Reinvesting Distributions 287
10．4．4 Types of Withdrawal Plans 288
10．5 Who Regulates Mutual Funds? 291
10．5．1 National Instruments 81-101 and 81-102 291
10．5．2 General Mutual Fund Requirements 291
10．5．3 Registration Requirements for the Mutual Fund Industry 295
10．5．4 Mutual Fund Management Restrictions 296
10．5．5 Distribution of Mutual Fund Securities by a Financial Institution 300
10．6 Types of Mutual Funds 302
10．6．1 Cash and Equivalent Funds 302
10．6．2 Fixed-income Funds 303
10．6．3 Balanced Funds 304
10．6．4 Equity Funds 305
10．6．5 Specialty and Sector Funds 307
10．6．6 Index Funds 308
10．6．7 Comparing Fund Types 308
10．7 Fund Management Styles 308
10．8 Comparing Mutual Fund Performance 310
10．8．1 Performance Measurement 311
10．8．2 Reading Mutual Fund Quotations 311
10．8．3 Measures of Mutual Fund Performance 312
10．8．4 Time Frames 313
10．8．5 Comparative Performance 314
10．8．6 Issues that Complicate Mutual Fund Performance 314
10．8．7 Risk 315
10．8．8 Pitfalls to Avoid 316
11 The Portfolio Approach 318
11．1 Overview of Analysis methods 318
11．1．1 Fundamental Analysis 318
11．1．2 Quantitative Analysis 318
11．1．3 Technical Analysis 318
11．1．4 Market Theories 319
11．2 Industry Analysis 320
11．2．1 Classify products and Services 321
11．2．2 Classify Company 322
11．3 Interpreting Financial Statements 324
11．4 Risk and Return of Portfolio 326
11．4．1 Overview 326
11．4．2 Risk ― The Other Side of the Coin 328
11．4．3 The Portfolio Management Process 330
11．4．4 Rate of Return on Portfolios 331
11．4．5 Measuring Risk in a Portfolio 333
11．4．6 Monitor the Economy and Others 333
12 Financial Planning 339
12．1 Financial Planning and the Investment Advisor 339
12．2 Information Gathering， Communication and Education 340
12．2．1 Information Gathering 340
12．2．2 Communicating with the Client 341
12．2．3 Educating the Client 341
12．3 The Process of Financial Planning 342
12．3．1 Collect All Relevant Data 342
12．3．2 Identify Objectives 345
12．3．3 Identify Financial Problems and Constraints 348
12．3．4 Develop a Written Financial Plan 348
12．3．5 Implement Recommendations 348
12．3．6 Review， Revise and Make Recommendations 348
12．3．7 Conclusion 349
12．4 Ethics and the Financial Advisor 349
12．5 Standards of Conduct 350
12．5．1 Know Your Client and Suitability 350
12．5．2 Trustworthiness， Honesty and Fairness 351
12．5．3 Fiduciary Duty and Professionalism 352
12．5．4 Conclusion 353
12．6 Taxes and Taxation Issues 353
12．6．1 The Income Tax System 355
12．6．2 Types of Income 356
12．6．3 Calculating Income Tax Payable 357
12．6．4 Tax on Dividends 358
12．6．5 Tax Deductible Items Related to Investment Income 360
12．6．6 Capital Gains and Losses 361
12．6．7 Capital Losses 365
12．6．8 Tax Loss Selling 366
12．6．9 Minimum Tax 367
12．7 Appendix ― Registrant Code of Ethics and Standards of Conduct 367
12．7．1 Registrant Code of Ethics 367
12．8 Appendix ― Juan Casuso 371
12．8．1 Personal Evaluation 371
12．8．2 Investment Objectives 372
12．8．3 Tax Planning for Juan Casuso 372
12．8．4 Asset Mix 372
12．8．5 Recommended Portfolio 373
12．9 Johanna Von Rosen 373
12．9．1 Personal Evaluation 375
12．9．2 Investment Objectives 375
12．9．3 The Recommended Portfolio 375

目 录
Contents
1 Introduction 1
1．1 E-finance Technologies in Payment Services 1
1．2 History of E-finance in US 2
1．3 Two Questions 3
1．4 Debit Cards 4
1．5 The E-finance Impact on Financial Markets 7
1．5．1 Stock Markets 7
1．5．2 Foreign Exchange Markets 9
1．5．3 Bond Markets 10
1．5．4 Concluding Remarks 10
2 Bitcoin： A Peer-to-Peer Electronic Cash System 11
2．1 What Is a Bitcoin ? 11
2．1．1 Introduction 11
2．1．2 Creation of Coins 12
2．1．3 Sending Payments 12
2．1．4 Preventing Double-Spending 14
2．2 Anonymity 15
2．3 Where to See and Explore? 15
2．4 How Many People Use Bitcoin? 16
2．5 Why Does My Bitcoin Address Keep Changing? 17
2．6 Network 18
2．6．1 The Steps to Run the Network 18
2．6．2 What Is Mining? 18
2．6．3 Simplified Payment Verification 20
2．6．4 Combining and Splitting Value 20
2．7 Security 20
2．7．1 Privacy 20
2．7．2 There Are Two Questions 21
2．7．3 Criminal Activities 22
2．7．4 Theft 23
2．8 Taxation and Regulation 24
2．9 Conclusion 25
3 Capital Markets and Financial Services 26
3．1 What Is Investment Capital? 26
3．2 Characteristics of Capital 26
3．2．1 Sources of Capital 27
3．2．2 Users of Capital 29
3．3 The Role of Financial Instruments 30
3．3．1 Debt 30
3．3．2 Equity 30
3．3．3 Investment Funds 31
3．3．4 Derivatives 31
3．4 The Role of Financial Markets 31
3．4．1 Stock Exchanges around the World 32
3．4．2 Exchange Memberships 33
3．5 Governing Bodies and Administration 33
3．5．1 Boards of Directors 33
3．5．2 Statutory Responsibilities 34
3．5．3 Future Trends 34
3．6 Dealer Markets the Unlisted Market 35
3．6．1 The Unlisted Equity Market 35
3．6．2 The Fixed-Income Marketplace 36
3．7 The Role of Financial Intermediaries 36
3．7．1 Size and Characteristics of the Securities Industry Today 37
3．7．2 Financing Securities Houses 41
3．7．3 Principal and Agency Functions 42
3．7．4 Dealer， Principal and Agency Transactions 43
4 Financing， Listing and Regulations 45
4．1 Financing 45
4．1．1 Government Financing 46
4．1．2 Corporate Finance 48
4．2 Corporations Financing Process 48
4．2．1 The Dealer’s Advisory Relationshipwith Corporations 49
4．2．2 The Method of Offering 49
4．3 Advice on the Security to Be Issued 51
4．4 The Prospectus 52
4．4．1 The Short Form Prospectus System 55
4．4．2 Internet Prospectus 55
4．5 Other Documents and Sale of the Issue 56
4．6 The Financing Process 57
4．6．1 After-market Stabilization 59
4．6．2 Other Methods of Distribution 60
4．6．3 Junior Company Distributions 60
4．7 Options of Treasury Shares 61
4．7．1 The Listing Process 61
4．7．2 Advantages of Listing 61
4．7．3 Disadvantages of Listing 62
4．7．4 Disadvantages of Listing 62
4．7．5 The Listing Application 62
4．7．6 Regulations for Listed Companies 63
4．7．7 Withdrawing Trading Privileges 63
4．8 Temporary Interruption of Trading 63
4．8．1 Delayed Opening 63
4．8．2 Halt in Trading 64
4．8．3 Suspension of Trading 64
4．9 Cancelling a Listing (Delisting) 64
4．10 Regulation and Investor Protection 64
4．10．1 Underlying Principles of Provincial Securities Legislation 64
4．10．2 Registration 65
4．10．3 The National Registration Database (NRD) 66
4．11 Designated Non-trading Employees 66
4．12 Securities Firms 66
4．13 Know Your Client Rule 67
4．14 Breach of Fiduciary Duty 67
4．15 Public Company Disclosure and Investor Rights 70
4．16 The Purchasers’ Statutory Rights 71
4．17 Continuous Disclosure 72
4．18 Takeover Bids 73
4．19 Early Warning Disclosure 75
4．20 Insider Trading 75
4．21 Investigation and Prosecution 76
5 Corporations and their Financial Statements 77
5．1 Types of Business Structures 77
5．2 Incorporated Businesses 78
5．2．1 Government Approval 78
5．2．2 Choice of Jurisdiction 78
5．2．3 Public and Private Corporations 79
5．2．4 The By-laws 79
5．2．5 Voting and Control 79
5．2．6 Shareholders’ Meetings 80
5．2．7 Voting Trusts 80
5．2．8 Directors 81
5．2．9 Officers 82
5．2．10 Financing the Corporation 82
5．2．11 Advantages of Incorporation 85
5．2．12 Disadvantages of Incorporation 86
5．3 Understanding the Balance Sheet 86
5．3．1 General Form of the Balance Sheet 87
5．3．2 Classification of Assets 88
5．3．3 Classification of Liabilities 94
5．3．4 Shareholders’ Equity 97
5．4 Understanding the Earnings Statement 98
5．4．1 What It Shows 98
5．4．2 Structure of the Earnings Statement 99
5．4．3 The Operating Section (items 28 to 34) 100
5．4．4 Non-Operating Section (item 35) 102
5．4．5 The Creditors’ Section (items 37and 38) 102
5．4．6 The Owners’ Section (items 40 to 45) 102
5．5 Understanding the Retained Earnings Statement 104
5．6 Understanding the Cash Flow Statement 105
5．6．1 Introduction 105
5．6．2 Operating Activities 106
5．6．3 Financing Activities (items 51 to 54) 107
5．6．4 Investing Activities (items 55 to 57) 107
5．6．5 Change in Cash Flow (items 58 to 60) 107
5．6．6 Supplemental information (items 61 to 62) 108
5．7 Other Information in the Annual Report 108
5．7．1 Footnotes to the Financial Statements 108
5．7．2 The Auditor’s Report 109
5．8 Specimen Financial Statements 110
6 Fixed-income Securities 115
6．1 Definitions 115
6．1．1 Fixed-income Securities 115
6．1．2 Bonds and Debentures 115
6．1．3 Interest 115
6．1．4 Face Value and Denomination 116
6．1．5 Price and Yield 116
6．1．6 Term to Maturity 117
6．1．7 Liquid Bonds， Negotiable Bonds， and Marketable Bonds 117
6．2 The Rationale for Issuing Fixed-Income Securities 117
6．2．1 Financing Operations or Growth 118
6．2．2 Financial Leverage 118
6．3 Size of the Fixed-income Market 118
6．4 Features and Provisions of Bonds 119
6．4．1 Call or Redemption Feature 119
6．4．2 Sinking Funds and Purchase Funds 120
6．4．3 Extendible and Retractable Bonds 121
6．4．4 Convertible Bonds and Debentures 121
6．4．5 Protective Provisions 124
6．5 Types of Fixed-income Securities 127
6．5．1 Government of Canada Securities 127
6．5．2 Provincial Government Securities and Guarantees 130
6．5．3 Municipal Debentures/Installment Debentures 132
6．5．4 Corporate Bonds 133
6．5．5 Other Types of Fixed Income Securities 136
6．5．6 Reading Bond Quotes 138
6．5．7 The Bond Rating Services 139
6．6 Bond Pricing Principles 140
6．6．1 The Use of Present Value 140
6．6．2 Calculations for Fixed-Income Securities 143
6．6．3 Theories of Interest Rate Determination 145
6．6．4 Fixed-Income Pricing Properties 148
6．6．5 The Yield Curve and Bond Switching 153
6．7 Delivery， Settlement and Regulation 156
6．7．1 Bond Delivery 156
6．7．2 Clearing and Settlement 156
6．7．3 Regulation of Bond Trading 157
6．7．4 Accrued Interest 158
6．8 Bond Indexes 160
6．8．1 Uses of Bond Indexes 160
6．8．2 Scotia Capital Canadian Bond Market Indexes 160
6．8．3 Merrill Lynch Global Indexes 161
6．8．4 Other Index Providers 161
7 Equities 162
7．1 Common Shares 162
7．2 Rights and Advantages of Common Share Ownership 162
7．2．1 Capital Appreciation 163
7．2．2 Dividends 163
7．2．3 Voting Privileges 167
7．2．4 Tax Treatment 168
7．2．5 Marketability 170
7．2．6 Stock Splits and Consolidations 170
7．2．7 Reading Stock Quotations 172
7．3 Preferred Shares 173
7．3．1 The Preferred’s Position 173
7．3．2 Preference as to Assets 173
7．3．3 Preference as to Dividends 174
7．3．4 Features of Preferred Shares 174
7．3．5 Special Protective Provisions 177
7．3．6 Why Do Companies Issue Preferred Shares? 178
7．3．7 Who Buys Preferred Shares? 178
7．4 Types of Preferreds 179
7．4．1 Fixed Rate (or Straight) Preferreds 179
7．4．2 Convertible Preferreds 179
7．4．3 Retractable Preferreds 182
7．4．4 Floating Rate Preferreds 183
7．4．5 Foreign-pay Preferreds 184
7．4．6 Canadian Originated Preferred Securities (COPrS) 184
7．4．7 Other Types of Preferreds 185
7．5 Cash and Margin Accounts 186
7．5．1 Cash Accounts 186
7．5．2 Margin Accounts 188
7．6 Short Selling of Equities 190
7．6．1 What Is Short Selling? 190
7．6．2 How is Short Selling Done? 190
7．7 Equity Transactions 194
7．7．1 An Agency Transaction?Trading Procedures 194
7．7．2 Settlement Procedures 195
7．7．3 Other Transaction Models 196
7．8 Buy and Sell Orders 197
7．8．1 Market Order 197
7．8．2 Limit Order 197
7．8．3 Day Order 197
7．8．4 Good Till Cancelled (GTC) Order 197
7．8．5 All or None Order (AON Order) 197
7．8．6 Any Part Order 198
7．8．7 Good Through Order 198
7．8．8 Stop Loss and Stop Buy Orders 198
7．8．9 The Preferential Trading Rule and the Pro or N-C Order 199
7．9 Stock Indexes and Averages 199
7．9．1 What Is a Stock Index? 199
7．9．2 What Is an Average? 200
7．9．3 Canadian Market Indexes 200
7．9．4 U．S． Stock Market Indexes 204
7．9．5 International Stock Market Indexes and Averages 207
8 Derivatives 209
8．1 What Is a Derivative? 209
8．1．1 Features Common to All Derivatives 209
8．1．2 Derivative Markets 210
8．1．3 Key Differences Between Exchange-traded and OTC Derivatives 211
8．2 Types of Underlying Assets 213
8．2．1 Commodities 213
8．2．2 Financials 214
8．3 Who Uses Derivatives and Why Do They Use Them? 215
8．3．1 Individual Investors 215
8．3．2 Institutional Investors 216
8．3．3 Corporations and Businesses 217
8．3．4 Derivative Dealers 218
8．4 Options 219
8．4．1 Key Terms and Definitions 219
8．4．2 Option Exchanges 223
8．4．3 Reading an Options Quotation 223
8．4．4 Basic Option Strategies for Individual and Institutional Investors 224
8．4．5 Basic Option Strategies for Corporations 232
8．5 Forwards 233
8．5．1 Futures： Key Terms and Definitions 233
8．5．2 Futures Exchanges 235
8．5．3 Reading a Futures Quotation 235
8．5．4 Basic Futures Strategies for Investors 236
8．5．5 Basic Futures Strategies for Corporations 238
8．6 Rights and Warrants 240
8．6．1 Rights 240
8．6．2 Warrants 244
9 Hedge Funds 246
9．1 Overview of Hedge Funds 246
9．1．1 What Is a Hedge Fund? 246
9．1．2 Comparing Hedge Funds to Mutual Funds 246
9．1．3 Who Can Invest in Hedge Funds? 246
9．1．4 History of Hedge Funds 248
9．1．5 Size of the Hedge Fund Market 249
9．2 Portfolio Theory and Hedge Funds 249
9．2．1 Portfolio Theory 250
9．2．2 Measuring Portfolio Performance 252
9．3 Benefits and Risks of Hedge Funds 254
9．3．1 Benefits of Hedge Funds 254
9．3．2 Risks Associated with Hedge Funds 255
9．3．3 Due Diligence 259
9．4 Hedge Fund Strategies 261
9．4．1 Relative Value Strategies 261
9．4．2 Event-Driven Strategies 264
9．4．3 Directional Funds 265
9．5 Funds of Hedge Funds 268
9．5．1 Advantages 268
9．5．2 Disadvantages 269
9．6 Principal-protected Notes 270
9．6．1 What Is a Principal-Protected Note? 270
9．6．2 Costs 271
9．6．3 Risks 271
9．6．4 Choosing a PPN 272
9．7 Tracking Hedge Fund Performance 273
9．8 Conclusion 273
10 E-mutual Funds 274
10．1 Advantages of Investing in Mutual Funds 274
10．1．1 Low Cost Professional Management 274
10．1．2 Diversification 274
10．1．3 Variety of Types of Funds/Transferability 274
10．1．4 Variety of Purchase and Redemption Plans 275
10．1．5 Liquidity 275
10．1．6 Ease of Estate Planning 275
10．1．7 Loan Collateral 275
10．1．8 Eligible for Margin 275
10．1．9 Various Special Options 275
10．2 Disadvantages Associated with Mutual Funds 276
10．2．1 Costs 276
10．2．2 Unsuitable as a Short-Term Investment 276
10．2．3 Unsuitable as an Emergency Reserve 276
10．2．4 Professional Investment Management Is Not Infallible 276
10．2．5 Tax Complications 276
10．3 The Structure of Mutual Funds 276
10．3．1 Trust versus Corporation 276
10．3．2 The Organizational Structure of a Mutual Fund 278
10．3．3 How Mutual Funds Units or Shares Are Priced 279
10．3．4 Charges Associated with Mutual Funds 280
10．4 Redeeming Mutual Fund Units or Shares 284
10．4．1 Calculating Redemption/Selling Price 285
10．4．2 Tax Consequences 285
10．4．3 Buying by Reinvesting Distributions 287
10．4．4 Types of Withdrawal Plans 288
10．5 Who Regulates Mutual Funds? 291
10．5．1 National Instruments 81-101 and 81-102 291
10．5．2 General Mutual Fund Requirements 291
10．5．3 Registration Requirements for the Mutual Fund Industry 295
10．5．4 Mutual Fund Management Restrictions 296
10．5．5 Distribution of Mutual Fund Securities by a Financial Institution 300
10．6 Types of Mutual Funds 302
10．6．1 Cash and Equivalent Funds 302
10．6．2 Fixed-income Funds 303
10．6．3 Balanced Funds 304
10．6．4 Equity Funds 305
10．6．5 Specialty and Sector Funds 307
10．6．6 Index Funds 308
10．6．7 Comparing Fund Types 308
10．7 Fund Management Styles 308
10．8 Comparing Mutual Fund Performance 310
10．8．1 Performance Measurement 311
10．8．2 Reading Mutual Fund Quotations 311
10．8．3 Measures of Mutual Fund Performance 312
10．8．4 Time Frames 313
10．8．5 Comparative Performance 314
10．8．6 Issues that Complicate Mutual Fund Performance 314
10．8．7 Risk 315
10．8．8 Pitfalls to Avoid 316
11 The Portfolio Approach 318
11．1 Overview of Analysis methods 318
11．1．1 Fundamental Analysis 318
11．1．2 Quantitative Analysis 318
11．1．3 Technical Analysis 318
11．1．4 Market Theories 319
11．2 Industry Analysis 320
11．2．1 Classify products and Services 321
11．2．2 Classify Company 322
11．3 Interpreting Financial Statements 324
11．4 Risk and Return of Portfolio 326
11．4．1 Overview 326
11．4．2 Risk ― The Other Side of the Coin 328
11．4．3 The Portfolio Management Process 330
11．4．4 Rate of Return on Portfolios 331
11．4．5 Measuring Risk in a Portfolio 333
11．4．6 Monitor the Economy and Others 333
12 Financial Planning 339
12．1 Financial Planning and the Investment Advisor 339
12．2 Information Gathering， Communication and Education 340
12．2．1 Information Gathering 340
12．2．2 Communicating with the Client 341
12．2．3 Educating the Client 341
12．3 The Process of Financial Planning 342
12．3．1 Collect All Relevant Data 342
12．3．2 Identify Objectives 345
12．3．3 Identify Financial Problems and Constraints 348
12．3．4 Develop a Written Financial Plan 348
12．3．5 Implement Recommendations 348
12．3．6 Review， Revise and Make Recommendations 348
12．3．7 Conclusion 349
12．4 Ethics and the Financial Advisor 349
12．5 Standards of Conduct 350
12．5．1 Know Your Client and Suitability 350
12．5．2 Trustworthiness， Honesty and Fairness 351
12．5．3 Fiduciary Duty and Professionalism 352
12．5．4 Conclusion 353
12．6 Taxes and Taxation Issues 353
12．6．1 The Income Tax System 355
12．6．2 Types of Income 356
12．6．3 Calculating Income Tax Payable 357
12．6．4 Tax on Dividends 358
12．6．5 Tax Deductible Items Related to Investment Income 360
12．6．6 Capital Gains and Losses 361
12．6．7 Capital Losses 365
12．6．8 Tax Loss Selling 366
12．6．9 Minimum Tax 367
12．7 Appendix ― Registrant Code of Ethics and Standards of Conduct 367
12．7．1 Registrant Code of Ethics 367
12．8 Appendix ― Juan Casuso 371
12．8．1 Personal Evaluation 371
12．8．2 Investment Objectives 372
12．8．3 Tax Planning for Juan Casuso 372
12．8．4 Asset Mix 372
12．8．5 Recommended Portfolio 373
12．9 Johanna Von Rosen 373
12．9．1 Personal Evaluation 375
12．9．2 Investment Objectives 375
12．9．3 The Recommended Portfolio 375