| In the course of economic transition, China has seen a dazzling produce and development of her security market. Within a short history of 10 years, the market has turned from the course of trial and probing into an integral part of the Chinese market economic system, which is playing an increasingly important role in the conversion of savings into investment and the optimal allocation of resources. It is, however, undeniable that the Chinese security market is at the present stage in a dynamic equilibrium with mandatory characteristics, which bears varied negative effects. The reason for this is that the China's security market was developed on the basis of the transition from planed economy to market economy. This article will cut into the issue with an analysis of the supply and demand in the security market and then get further down into the equilibrium of the market as a whole.Supply and demand are two variables at the top hierarchy of the study of the security market. The direction and tempo of their change determine a crucial effect on the fundamental stance of the security market. Just because the security market provides us with a facility for direct financing, we thought it is necessary to study the respective determinant factor of supply and demand, their balancing mechanism and their statistical assessment in the market form a direction of theoretical research, especially when we are striving to promote direct financing in our economy today. This article is attempting to set a theoretical analytical framework so that all the above-mentioned issues could be father discussed through the combination of the researches in security market and economic fundamentals with its basis.The paper is composed of seven chapters in four parts, which are arranged in the sequence of the demand for and supply of the security products, statistical assessment, and balancing factors. An analysis of the behavior of investment and financing and the determinants is made first from a micro perspective. The statistical assessment and balancing factors are analysis of the aggregate demand and aggregate supply of the securities in the market from a macro perspective.The first chapter concerns the security market and the market system. This article is analysis of the relationship between the security market and others market, the unique function of the security market and its special status in the general market system are opened out.The second chapter is an introduction to the commodity money feature of the securities and their characteristic. We stress to study the characteristic of securities value and use value, which affect the demand and supply of the securities market, meanwhile, produce the complicated of equilibrium analysis of demand and supply too.The third chapter is on the demand analyses for security products. After the demand-supply curve being set up, a partial analysis is drawn into investor behavior with the conclusion that the profit maximizing portfolio is at the point where the investment budget line touches the investment indifference line, or, to be more exact, the topgallant investment bundle for any investor is when any pair of investment assets have the same marginal return. The price effect, income effect, substitute effect and risks involved are also covered in this chapter.The fourth chapter involves the supply analysis. It is on the basis of an analysis of the financing behavior that the author draw a conclusion: the optimal financing strategy is determinedby the tangency point of quantity indifference curve of financing and cost indifference curve of financing, furthermore which means to equal to for random two kinds of the marginal financing cost of financing product.The fifth chapter presents the equilibrium of the supply and demand, both partial and general. The general equilibrium analysis concludes that the maximum return and the optimal financing structure for the investor's investment come up to the rate of marginal financing conversion and the marginal substitute of...
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