2. Capital market: The capital market refers to the market for the issuance and trading of securities such as stocks and bonds, as well as the market for long-term capital deposits and loans, corporate mergers and acquisitions, and asset restructuring.

3. Hot money: Also known as hot money or speculative short-term capital, it usually refers to short-term capital that flows quickly for the purpose of speculative profit. Its entry and exit often easily induce market and even financial turmoil. The investment objects of hot money are mainly foreign exchange, stocks, precious metals and their derivatives markets, etc. It has the characteristics of strong speculative nature, fast liquidity and strong concealment.

4. Roadshow: (Roadshou) is a widely used method of promoting securities issuance in the world. It refers to the promotion activities of securities issuers to institutional investors before issuing securities. The purpose of roadshows is to promote communication and exchange between investors and stock issuers to ensure the smooth issuance of stocks. Through roadshows, stock issuers and underwriters can more objectively determine the issuance volume, issue price and issuance timing.

5. Blue chip stocks: Blue chip stocks refer to the stocks issued by large companies that occupy a dominant position in their respective industries, have excellent performance, active transactions, and generous dividends. The word “blue chip” originated from Western casinos. Blue chips are the most valuable chips, so investors applied it to stocks and formed the term “blue chip stocks”.

6. Policy banks: Policy banks generally refer to financial institutions established by the government for the purpose of implementing national industrial policies and regional development policies and not for profit. In 1994, my country established three policy banks – China Development Bank, Export-Import Bank of China and Agricultural Development Bank of China. China Development Bank was converted into a commercial bank on December 16, 2008.

7. Price-to-earnings ratio: The price-to-earnings ratio refers to the ratio of a stock’s price to its earnings per share during an examination period (usually 12 months). Investors usually use this ratio to estimate the investment value of a stock. Generally speaking, the lower the P/E ratio of a stock, the shorter the investment payback period, the smaller the investment risk, and the greater the investment value of the stock.

8. Offshore finance: refers to the provision of settlement, lending, capital flow, insurance, trust, securities and Financial services such as derivatives trading, and financial activities that are not restricted by the general financial laws and regulations of the country where the market is located and the country where the currency is issued. The main business of offshore finance is to absorb funds from non-residents and serve the financing needs of non-residents. Therefore, it is vividly described as a financial business with “both ends outside”, and the market formed is called the offshore financial market.

9. Financial disintermediation: refers to the supply of funds bypassing the intermediary system such as commercial banks and directly flowing into the hands of demanders and financiers, resulting in extracorporeal circulation of funds. For example, when a company needs funds, it directly issues bonds, stocks or short-term commercial papers in the market instead of directly obtaining loans from commercial banks. From the perspective of financing methods, financial disintermediation is a process in which social financing gradually changes from indirect financing to direct financing.

10. “First board”, “Second board” and “Third board”
First board market: also known as the main board market, refers to the securities market in the traditional sense and is the main place for the issuance, listing and trading of securities in a country or region. The main board market is the most important part of the capital market. It can reflect economic development to a large extent and is known as the “barometer of the national economy.” Most of its listed companies are large and mature companies with large capital scale and stable profitability.

The second board market: It is mainly established for small and medium-sized emerging companies. Its listing requirements are generally wider than those of the “first board”. Compared with the main board market, the second board market has the characteristics of forward-looking, high-risk, strict regulatory requirements, and obvious high-tech industry orientation. The GEM of Shenzhen Stock Exchange belongs to the second board market.
The third board market: the agency share transfer business refers to the special transfer business provided by securities companies with the qualification to handle unlisted company share transfer business for unlisted companies through electronic transactions approved by the Securities Association of China. Its services The targets are small and medium-sized high-tech enterprises. The New Third Board that we often talk about now is the quotation and transfer system of Zhongguancun Science and Technology Park Unlisted Co., Ltd.

Underlying derivatives
Knowledge point 1: Long term

1. Definition
– A forward contract refers to a contract in which both parties agree to buy or sell a certain amount of an underlying asset at a certain price at a   certain time in the future;
– Generally speaking, the two parties agree to determine the terms of the contract. The contract terms are tailor-made for the buyer and seller and meet the special requirements of both parties. They are usually reached through over-the-counter transactions (OTC).

2. Common forward transactions include
– Commodity forward trading
– Forward Rate (FRA)
– Foreign exchange forward transactions
– Non-deliverable foreign exchange forwards (NDF)
– Forward stock contract

3. The difference between forward contract transactions and spot transactions
– In spot trading, after the two parties reach an agreement on the price and quantity of the trading assets, they usually deliver the money and assets immediately or within an agreed few days. The corresponding price is called the spot price;
– The essence of a forward contract is to determine the rights and obligations of both parties in future transactions in the form of a commercial contract. At a determined time in the future, regardless of pros and cons, both parties have the rights and obligations to complete the transaction according to the contract.

12. Non-financial enterprise debt financing instruments: refer to securities issued by non-financial enterprises with legal personality in the inter-bank bond market, with an agreement to repay principal and interest within a certain period of time. The current types of debt financing instruments include short-term financing bonds, medium-term notes and collective notes for small and medium-sized enterprises.

13. Short-term medium-term notes: short-term financing bills and medium-term notes. “Short-term financing bills” refer to securities issued and traded by non-financial enterprises with legal personality in the inter-bank bond market (that is, purchased by domestic banks but not issued to the public) and agreed to repay principal and interest within one year. . “Medium-term note” is the abbreviation of “medium-term note”, which refers to a debt financing instrument issued by a non-financial enterprise with legal personality in the inter-bank bond market and agrees to repay principal and interest within a certain period of time. Its issuance period is more than 1 year, usually 3-5 years.

14. Inter-bank bond market: The national inter-bank bond market refers to the bond buying and selling of financial institutions such as commercial banks, rural credit unions, insurance companies, and securities companies relying on the National Interbank Funding Center and the China Treasury Depository and Clearing Corporation. and repurchase market. The inter-bank bond market has now become an important part of my country’s bond market. Most of the policy financial bonds of book-entry treasury bonds are issued and traded on this market.

15. Inter-bank lending market: The inter-bank lending market, also known as the inter-bank lending market, refers to the market for short-term financing between financial institutions in the form of currency lending. In layman’s terms, it is a market where financial institutions lend money to each other.

16. “Money”: The word “money” is often used as a metaphor for the central bank’s monetary policy. The monetary policy adopted by the central bank to reduce credit supply, raise interest rates, and eliminate inflationary pressure caused by excessive demand has become a tightening monetary policy. On the contrary, the monetary policy adopted to prevent economic recession by increasing the supply of credit, lowering interest rates, promoting increased investment, and driving economic growth is known as monetary easing.

17. Central Bank: The central bank is the highest monetary and financial management institution of a country and occupies a dominant position in the financial system of various countries. The functions of the central bank are to formulate and implement monetary policies, maintain financial stability, and provide financial services. The business of the central bank is non-profit. my country’s central bank is the People’s Bank of China (referred to as the “central bank”).

18. OTC: OTC (Over The Counter) is the “over-the-counter market”, also known as the “over-the-counter market”. A long time ago, banks also engaged in stock trading business: because they sold stocks to customers over the bank counter, this market was called the over-the-counter market. Nowadays, it generally refers to the market that trades outside the exchange, and also It’s called the over-the-counter market.

19. Credit enhancement: Credit enhancement means improving credit. Bond issuers can use various credit enhancement methods or measures to improve their own credit ratings, enhance bond credit, reduce bond default rates or reduce default loss rates, thereby reducing the default risks and losses borne by bond holders. By improving credit enhancement, companies with lower credit ratings can obtain financing, and bond investors also receive multiple protections. There are various means of bond credit enhancement, among which third-party guarantees, mortgage and pledge guarantees, bond insurance, bond trusts, and credit reserves are the most common.

20. Counter guarantee: Counter guarantee is also called “claim guarantee”, repayment agreement or letter of guarantee. It refers to a guarantee set up to protect the realization of the debtor’s right of recourse after a guarantor other than the debtor assumes guarantee liability in the future. For example, a guarantee company or a guarantor has guaranteed your loan. If you fail to repay the loan, the guarantee company or guarantor will be liable for reimbursement, so they need you to provide them with certain assets. To protect your own rights and interests, this process is counter-guarantee.

22. Negative interest rates: To put it simply, the value of money deposited in the bank will become less and less even after interest is included. The so-called negative interest rate refers to the rapid rise of the price index (CPI), causing bank deposit interest rates to actually become negative. The interest rate on bank deposits cannot keep up with the inflation rate and becomes negative interest rate.

23. Trust loans and entrusted loans: Trusts are handled by trust companies. Entrusted loans are handled by banks.
Trust loans refer to trust institutions using their own funds such as trust deposits to issue loans to self-approved units and projects within the scope stipulated by the state.
Entrusted loans refer to funds provided by clients such as government departments, enterprises, institutions, and individuals, and are issued, supervised, and used by commercial banks (trustees) based on the loan objects, purposes, amounts, terms, interest rates, etc. determined by the clients, and assisted in recovery of loans.

24. Capital adequacy ratio: A bank’s capital adequacy ratio refers to the ratio of a bank’s capital to its total weighted risk assets. It reflects the extent to which a commercial bank can bear losses with its own capital before the assets of depositors and bondholders suffer losses.

25. Position: It means money and is a popular term in the financial and business circles. Often used in securities, stocks, and futures trading. For example, the long and short positions often mentioned in stocks and futures are actually the abbreviations of long positions and short positions.

26. Financial supermarket: refers to a system that organically integrates various products and services of financial institutions and provides them to corporate or individual customers through cooperation with various social institutions and departments such as insurance, securities, appraisal, mortgage registration, notarization, etc. An integrated business model covering many financial products and value-added services.

27. Venture capital: Venture capital, also known as venture capital, is a venture capital fund that provides equity capital, supplemented by management, to small and medium-sized enterprises or high-growth enterprises with huge development potential and high risks through specialized investment institutions. , an investment model that pursues maximum capital appreciation gains.

28. Angel investment: Angel investment, also known as “informal private equity investment” or “informal venture capital”, is a subsystem of venture capital and refers to individuals or informal venture capital organizations with a certain amount of capital. A private investment method for early-stage, direct equity capital investment in start-ups with great development potential. Specifically refers to the first batch of investments in the entrepreneurial process of a company.

29. Bonds: Bonds refer to debt certificates issued to investors when governments, financial institutions, industrial and commercial enterprises and other institutions directly borrow money from society to raise funds, and promise to pay interest at a certain interest rate and repay the principal according to agreed conditions.

30. Stocks: Stocks are share certificates issued by a joint stock company to investors when raising capital, representing their holders’ ownership of the joint stock company.

32. Deposit insurance system: If a deposit insurance system is established, when the bank that implements the system has insufficient capital turnover or goes bankrupt and cannot pay depositors’ deposits, according to the terms of the insurance contract, the insured bank can obtain compensation from the deposit insurance institution. Or obtain financial assistance, or be accepted or merged, the depositor’s deposit losses will be reduced to the smallest possible extent.

33. Credit asset securitization: It is the process of converting originally uncirculated financial assets into negotiable capital market securities. For example: Bank A lent many housing loans. After combining, A sold housing mortgage securities to the public (A sold the securities and recovered the loan from the public). When they matured, the public (investors) who purchased the securities received the loan from A. Party A receives the transferred principal and interest; Bank A receives service fees for its services to the borrower and investor.

34. Primary market: The primary market, also known as the issuance market and primary market, refers to the transaction price formed by the first sale of financial securities to the public by fund demanders. In the primary market, fund demanders sell financial securities at wholesale prices to the initial purchasers of securities, that is, securities underwriters, who then market financial securities to final buyers.

35. Secondary market: The secondary market, also known as the circulation market and the secondary market, is a market formed by the sale and circulation of issued securities among investors at market prices.

36. IPO: The initial public offering is referred to as IPO (initial public offerings), which refers to the issuance method of a joint stock company or a limited liability company to the public for the first time. A limited liability company will become a joint stock company after its IPO.

37. Hedge Fund: A hedge fund is a securities investment fund that raises funds through private placement and uses leverage financing to obtain profits by investing in publicly traded securities and financial derivatives.

38. Hedging: Hedging is a trading behavior that uses futures contracts to maintain the value of commodities in the spot market. The “hedging” mentioned here mainly means that the same producer and operator buys or sells a certain number of spot commodities in the spot market and at the same time sells or buys the same spot commodity in the futures market in a similar quantity. , but the opposite direction of futures commodities (futures contracts), in order to achieve the purpose of avoiding price risks when adverse price changes occur in the spot market.

39. Speculation: The term “speculation” is used in futures and securities trading. It refers to the trading behavior of seizing opportunities based on judgment of the market and making use of the price differences that appear in the market to buy and sell and obtain profits. Speculators can “buy short” or “sell short.” Speculators are an important part of the futures market, and “speculation” is not a derogatory term.

40. Household financial assets: Household financial assets are mainly divided into two categories: financial assets and non-financial assets. Financial assets include bank deposits, bonds, stocks, investment funds, retirement funds, life insurance, various management assets, etc. Non-financial assets include owner-occupied residences, non-owner-occupied residences, commercial assets, automobiles, durable consumer goods, gold, silver, jewelry, antiques and art, etc.

42. MBO: MBO (Management Buy-Outs) is the abbreviation of “Manager Buy-Outs”. That is, the managers or managers of the target company use external financing capital to purchase the company’s equity, thereby changing the company’s owner structure, control structure and asset structure, thereby reorganizing the company and obtaining expected returns. After the MBO is completed, the former managers become today’s shareholders.

43. Refinancing business: In layman’s terms, refinancing means that institutions such as banks, funds, and insurance companies provide funds and securities, and securities companies act as intermediaries to provide these funds and securities to shareholders for financing or securities lending.

44. Bridge capital: Bridge capital is a kind of short-term financing. The purpose of providing bridge funds is to meet the conditions for docking with long-term funds through the financing of bridge funds, and then replace the bridge funds with long-term funds. Bridge funding is only a temporary state. It is characterized by short term, high gold content, high capital return, and easier risk control.

45. Loan-to-deposit ratio: The ratio of total commercial bank loans divided by total deposits, that is, total bank loans/total deposits. From the perspective of bank profitability, the higher the loan-to-deposit ratio, the better, because deposits have to pay interest. If a bank has a lot of deposits and few loans, it means that it has high costs and low income, and its profitability is poor. . However, from the perspective of banks resisting risks, the loan-to-deposit ratio should not be too high.

47. Bank’s non-performing assets: Bank’s non-performing assets are also often called non-performing debts, the most important of which are non-performing loans, which refer to loans that customers cannot repay principal and interest on time and in quantity. That is to say, the loan issued by the bank cannot recover the principal and interest according to the pre-agreed period and interest rate.

48. “Basic point” of exchange rate changes: According to market practice, the quotation of foreign exchange exchange rate usually consists of five significant figures. The last digit is called the basic point, which is the smallest unit that constitutes the exchange rate change. For example: 1 euro = 1.2817 U.S. dollars; when the euro against the U.S. dollar changes from 1.2817 to 1.2819, we say that the euro against the U.S. dollar has risen by two basic points.

49. B shares: The official name of B shares is RMB special stocks. It is a foreign-invested stock whose face value is expressed in RMB, subscribed and traded in foreign currencies, and listed and traded on stock exchanges in China (Shanghai, Shenzhen). B-share companies are registered and listed in China. Before 2001, investors were restricted to overseas persons. After 2001, domestic individual residents were allowed to invest in B-shares. The “B” in B shares is only relative to the “A” in A shares and has no practical meaning.

50. “Unlocking of large and small non-tradable stocks”: “Large and small non-tradable stocks” refer to large and small-amount restricted non-tradable stocks. Currently in the market, those with a shareholding ratio of more than 5% are called “big fei”, and those with a shareholding ratio of less than 5% are called “small fei”. The lifting of the non-tradable ban means that restricted non-tradable shares are allowed to be listed, increasing the number of tradable shares in the market, and non-tradable shares completely become tradable shares.

51. Reinsurance: Reinsurance, also called reinsurance, is a way for insurance companies to transfer part of the risks and responsibilities they bear by signing a reinsurance contract based on the original insurance contract. For example, if you buy property insurance worth 1 million yuan from an insurance company, this is called original insurance. In order to spread the risk, this insurance company has purchased property insurance worth 800,000 yuan from another insurance company with your property as the subject. This is reinsurance.

52. Strategic investors: refer to those who have advantages in capital, technology, management, market and talent, can promote the upgrading of industrial structure, enhance the core competitiveness and innovation capabilities of enterprises, expand the market share of enterprise products, are committed to long-term investment cooperation, and seek to obtain long-term Domestic and foreign large enterprises and large groups that seek profit returns and sustainable corporate development.

53. Institutional investors: In my country, institutional investors refer to legal entities engaged in securities investment in the financial market, including insurance companies, pension funds and investment funds, securities companies, banks, etc. The most active ones are securities operating institutions with qualifications for self-operated securities business, investment management funds that comply with relevant national policies and regulations, etc.

54. LOF fund: LOF fund (ListedOpen-Endedfund), listed open-end fund. After the issuance is completed, investors can subscribe and redeem fund shares at designated outlets, or buy and sell the fund on the exchange.