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more control and can reap greater benefits in the form of dividends (the dividend of
ordinary shares is not fixed) and increase in the value of shares.
Preference shares have different characteristics as compared to ordinary shares,
in terms of dividends; preference shareholders entitled to fixed dividends and able to
receive an additional dividend at the specified rate after dividend to ordinary
shareholders is amortised. Preference shares generally carry no voting rights but voting
rights may be made contingent upon failure to pay dividends on preference shares for a
certain period.
Today, the ordinary shares of public limited companies can be traded in the open
market at the worldwide stock exchange, and it is growing rapidly. In Malaysia, the stock
market traded at the Kuala Lumpur Stock Exchange (KLSE) – Bursa Malaysia.
2.2.3 Derivatives Market
One of the markets that are popular in investment nowadays is the Derivatives
Market. Derivatives markets can be described as where a financial instrument is pegged
to the value of an asset or commodity basis. These markets have been introduced since
1975 and are very useful to safeguard the value of commodity where price changes
happen dramatically. Currently, the development in derivatives market has encourage
more assets to be traded include stocks, bonds, commercial papers and, etc.
The return on this investment is depending on the performance of the movement of
underlying asset price. The basic instruments in the Derivatives Market are the Option,
Forward and Futures. (Further discussion in Chapter 7).
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