Using Securities Markets for Financing and Investing Opportunities

Size: px
Start display at page:

Download "Using Securities Markets for Financing and Investing Opportunities"

Transcription

1 Chapter 19 Using Securities Markets for Financing and Investing Opportunities McGraw-Hill/Irwin Copyright 2014 by The McGraw-Hill Companies, Inc. All rights reserved.

2 Chapter Nineteen NAME that COMPANY When the price of their stock rises to a certain level, many companies will split the stock in order to make the stock appear more affordable. However, this company run by America s most successful investor has never split its stock even when the price of the company s stock reached $150,000 a share (that s right $150,000 for one share.) Name that company! Berkshire Hathaway 19-5

3 The Function of Securities Markets LG1 The BASICS of SECURITIES MARKETS Securities markets are financial marketplaces for stocks and bonds and serve two primary functions: 1. Assist businesses in finding long-term funding to finance capital needs 2. Provide private investors a place to buy and sell securities such as stocks and bonds

4 The Function of Securities Markets LG1 TYPES of SECURITIES MARKETS Primary markets Handle the sale of new securities Initial Public Offering (IPO) -- The first offering of a corporation s stock Secondary markets Handle the trading of securities between investors with the proceeds of the sale going to the seller 19-7

5 The Role of Investment Bankers LG1 INVESTMENT BANKERS and INSTITUTIONAL INVESTORS Investment Bankers -- Specialists who assist in the issue and sale of new securities. Institutional Investors -- Large organizations such as pension funds or mutual funds that invest their own funds or the funds of others. 19-8

6 The Role of Investment Bankers LG1 INSTITUTIONAL INVESTORS Top 10 Institutional Investors (ranked by world assets) Combined asset value (2014) of Top 10 is greater than U.S. GDP Which company is the largest institutional Investor in the world? What is the total value of their worldwide assets? All amounts are in $ U.S. millions Data as of Dec. 31,

7 Stock Exchanges LG2 TOP STOCK EXCHANGES Source: What is the largest stock exchange in the world? How about the size of the Top 15 in the world (Oct. 2014)? 19-11

8 Securities Regulations and the SEC LG2 The SECURITIES and EXCHANGE COMMISSION Securities and Exchange Commission (SEC) Federal agency regulating stock exchanges Prospectus Must file this with the SEC before issuing stock; Must be sent to prospective investors Search using EDGAR (SEC)

9 Advantages & Disadvantages of Issuing Stock LG3 ADVANTAGES of ISSUING STOCK Stockholders are owners of a firm and never have to be repaid their investment. There s no legal obligation to pay dividends Issuing stock can improve a firm s balance sheet since stock creates no debt

10 Issuing Shares of Common and Preferred Stock LG3 TWO CLASSES of STOCK Common Stock Holders have the right to vote for the board of directors and share in the profits if dividends are approved Preferred Stock Owners are given preference in the payment of company dividends before common stock dividends are distributed 19-18

11 Learning the Language of Bonds LG4 LEARNING the LANGUAGE of BONDS Bond -- A corporate certificate indicating that an investor has lent money to a firm (or a government). Principal Face value of the bond Interest (Coupon Rate) Payment the bond issuer makes to the bondholders 19-20

12 Advantages & Disadvantages of Issuing Bonds BOND RATINGS LG4 Rating Moody s S & P Fitch Description Aaa AAA AAA Highest Quality Aa AA AA High Quality A A A Upper-Medium Grade Baa BBB BBB Medium Grade Ba BB BB Lower-Medium Grade B B B Speculative Caa CCC, CC CCC Poor Ca C DDD Highly Speculative C D D Lowest Grade 19-23

13 How Investors Buy Securities LG5 BUYING SECURITIES Stockbroker -- A registered representative who works as a market intermediary to buy and sell securities for clients. Online trading services, such as TD Ameritrade, E*Trade, and Scottrade, offer securities trading services online to buy and sell stocks and bonds

14 Choosing the Right Investment Strategy LG5 FIVE INVESTMENT CRITERIA 1. Investment risk 2. Yield 3. Duration 4. Liquidity 5. Tax consequences 19-29

15 Choosing the Right Investment Strategy LG5 BlackRock List (2015) Source:

16 Reducing Risk by Diversifying Investments LG5 PRIMARY INVESTMENT SERVICES CONSUMERS NEED Savings and investing advice Help with 401k plans Retirement planning Tax planning Estate planning Education expense planning Source: Investment Company Institute

17 Investing in Stocks LG6 PERCEPTIONS of the MARKET Bulls: Investors who believe stock prices are going to rise. Bears: Investors who expect stock prices to decline. Source: BlackRock.com

18 Understanding Stock Quotations LG6 UNDERSTANDING STOCK QUOTATIONS 19-42

19 Understanding Bond Quotations LG7 UNDERSTANDING BOND QUOTATIONS 19-45

20 Investing in Mutual Funds & Exchange- Traded Funds LG8 INVESTING in MUTUAL FUNDS and EXCHANGE-TRADED FUNDS Mutual Fund -- An organization the buys stocks and bonds and then sells shares in those securities to the public. The fund pools investors money and buys stocks according to the fund s purpose. Exchange-Traded Fund (ETF) -- Collections of stocks and bonds that are traded on securities exchanges, but are traded more like individual stocks than mutual funds

21 Investing in Mutual Funds & Exchange- Traded Funds LG8 PERCENTAGE of HOUSEHOLDS OWNING MUTUAL FUNDS Year % of Households % % % % % Source: Investment Company Institute Factbook

22 Understanding Mutual Fund Quotations LG8 UNDERSTANDING MUTUAL FUND QUOTATIONS 19-50

23 Understanding Mutual Fund Quotations LG8 COMPARING INVESTMENTS 19-51

24 Chapter 20 Money, Financial Institutions, and the Federal Reserve McGraw-Hill/Irwin Copyright 2014 by The McGraw-Hill Companies, Inc. All rights reserved.

25 What is the Money Supply? LG2 The MONEY SUPPLY Money Supply -- The amount of money the Federal Reserve makes available for people. The money supply is referred to as: - M1 -- Money that can be accessed quickly (coins, paper money, travelers checks, etc.). - M2 -- M1 + money that may take a little time to obtain (savings accounts, mutual funds, etc.). - M3 -- M2 + big deposits like institutional money market funds

26 What is the Money Supply? LG2 HIGHEST U.S. BILL DENOMINATION? Currently: highest denomination is $100 bill The highest bill ever printed, however, was a $100,000 note that was printed from December 18, 1934 to January 9, It was used for transactions between Federal Reserve Banks

27 Basics About the Federal Reserve LG2 The 12 FEDERAL RESERVE DISTRICT BANKS 20-77

28 Basics About the Federal Reserve LG2 MANAGING the MONEY SUPPLY The Fed uses three basic tools: 1. Reserve Requirement -- A percentage of commercial banks checking and savings accounts they must keep in the bank or in non-interest-bearing deposits at the local Federal Reserve district bank. 2. Open-Market Operations -- The buying and selling of government bonds. 3. Discount Rate -- The interest rate the Fed charges for loans to member banks

29 Protecting Your Funds LG5 PROTECTING DEPOSITORS MONEY The Federal Deposit Insurance Corporation (FDIC) -- An independent agency of the U.S. government that insures bank deposits up to $250,000. The Savings Association Insurance Fund (SAIF) -- Insures holders of accounts in savings and loan associations. The National Credit Union Administration (NCUA) -- Provides up to $250,000 coverage per individual depositor per institution

30 Using Technology to Make Banking More Efficient LG6 TECHNOLOGICAL ADVANCEMENTS in BANKING Electronic Funds Transfer System -- Messages about a transaction are sent from one computer to another so funds can be transferred quickly and more economically. Debit Card -- Serves the same function as a check; it withdrawals funds from a checking account.

31 Connecting through Social Media Career Plan Career Plan Q&A Work Time

Using Securities Markets for Financing & Investing Opportunities

Using Securities Markets for Financing & Investing Opportunities Chapter Nineteen Using Securities Markets for Financing & Investing Opportunities McGraw-Hill/Irwin Copyright 2010 by the McGraw-Hill Companies, Inc. All rights reserved. WARREN BUFFETT Berkshire Hathaway

More information

Saving and Investing. Chapter 11 Section Main Menu

Saving and Investing. Chapter 11 Section Main Menu Saving and Investing How does investing contribute to the free enterprise system? How does the financial system bring together savers and borrowers? How do financial intermediaries link savers and borrowers?

More information

Chapter. Investing in Bonds. 13.1 Evaluating Bonds 13.2 Buying and Selling Bonds. 2010 South-Western, Cengage Learning

Chapter. Investing in Bonds. 13.1 Evaluating Bonds 13.2 Buying and Selling Bonds. 2010 South-Western, Cengage Learning Chapter 13 Investing in Bonds 13.1 Evaluating Bonds 13.2 Buying and Selling Bonds 2010 South-Western, Cengage Learning Standards Standard 4.0 Investigate opportunities available for saving and investing.

More information

Bond Mutual Funds. a guide to. A bond mutual fund is an investment company. that pools money from shareholders and invests

Bond Mutual Funds. a guide to. A bond mutual fund is an investment company. that pools money from shareholders and invests a guide to Bond Mutual Funds A bond mutual fund is an investment company that pools money from shareholders and invests primarily in a diversified portfolio of bonds. Table of Contents What Is a Bond?...

More information

INTERACTIVE BROKERS DISCLOSURE STATEMENT FOR BOND TRADING

INTERACTIVE BROKERS DISCLOSURE STATEMENT FOR BOND TRADING INTERACTIVE BROKERS DISCLOSURE STATEMENT FOR BOND TRADING THIS DISCLOSURE STATEMENT DISCUSSES THE CHARACTERISTICS AND RISKS OF TRADING BONDS THROUGH INTERACTIVE BROKERS (IB). BEFORE TRADING BONDS YOU SHOULD

More information

education booklet CORPS Introduction to corporate bonds STOCKCROSS FINANCIAL SERVICES

education booklet CORPS Introduction to corporate bonds STOCKCROSS FINANCIAL SERVICES education booklet CORPS Introduction to corporate bonds STOCKCROSS FINANCIAL SERVICES corporate bonds Definition Corporate Bonds represent debt certificates issued by a corporation to raise funds for various

More information

Bonds and Yield to Maturity

Bonds and Yield to Maturity Bonds and Yield to Maturity Bonds A bond is a debt instrument requiring the issuer to repay to the lender/investor the amount borrowed (par or face value) plus interest over a specified period of time.

More information

Bonds, in the most generic sense, are issued with three essential components.

Bonds, in the most generic sense, are issued with three essential components. Page 1 of 5 Bond Basics Often considered to be one of the most conservative of all investments, bonds actually provide benefits to both conservative and more aggressive investors alike. The variety of

More information

Understanding Fixed Income

Understanding Fixed Income Understanding Fixed Income 2014 AMP Capital Investors Limited ABN 59 001 777 591 AFSL 232497 Understanding Fixed Income About fixed income at AMP Capital Our global presence helps us deliver outstanding

More information

Bond Valuation. Chapter 7. Example (coupon rate = r d ) Bonds, Bond Valuation, and Interest Rates. Valuing the cash flows

Bond Valuation. Chapter 7. Example (coupon rate = r d ) Bonds, Bond Valuation, and Interest Rates. Valuing the cash flows Bond Valuation Chapter 7 Bonds, Bond Valuation, and Interest Rates Valuing the cash flows (1) coupon payment (interest payment) = (coupon rate * principal) usually paid every 6 months (2) maturity value

More information

INVESTMENT CHOICES. Dr. Suzanne B. Badenhop Professor/Extension Specialist

INVESTMENT CHOICES. Dr. Suzanne B. Badenhop Professor/Extension Specialist INVESTMENT CHOICES Dr. Suzanne B. Badenhop Professor/Extension Specialist INVESTING 101 What is your investment objective? What is your age? What is your time horizon What is your risk comfort level? What

More information

March 16, 2015 What is a Mutual Fund? Mutual Funds

March 16, 2015 What is a Mutual Fund? Mutual Funds March 16, 2015 What is a Mutual Fund? Mutual Funds Professionally managed portfoliosmade up of stocks, bonds and other investments Pools money from many investors Securityis a tradable asset of any kind

More information

Bonds and preferred stock. Basic definitions. Preferred(?) stock. Investing in fixed income securities

Bonds and preferred stock. Basic definitions. Preferred(?) stock. Investing in fixed income securities Bonds and preferred stock Investing in fixed income securities Basic definitions Stock: share of ownership Stockholders are the owners of the firm Two types of stock: preferred and common Preferred stock:

More information

Chapter 14: Savings and Investing Savings and Investing

Chapter 14: Savings and Investing Savings and Investing Savings and Investing Consumers can use any money left over from purchasing goods and services toward savings or investing. Saving means putting money aside for future use. Investing is using savings to

More information

- Short term notes (bonds) Maturities of 1-4 years - Medium-term notes/bonds Maturities of 5-10 years - Long-term bonds Maturities of 10-30 years

- Short term notes (bonds) Maturities of 1-4 years - Medium-term notes/bonds Maturities of 5-10 years - Long-term bonds Maturities of 10-30 years Contents 1. What Is A Bond? 2. Who Issues Bonds? Government Bonds Corporate Bonds 3. Basic Terms of Bonds Maturity Types of Coupon (Fixed, Floating, Zero Coupon) Redemption Seniority Price Yield The Relation

More information

Traditionally pension schemes invested in four main asset classes: Shares (Equities or Stocks), Bonds, Property and Cash.

Traditionally pension schemes invested in four main asset classes: Shares (Equities or Stocks), Bonds, Property and Cash. Asset Classes Traditionally pension schemes invested in four main asset classes: Shares (Equities or Stocks), Bonds, Property and Cash. Shares (also called Equities or Stocks) are shares bought in quoted

More information

INVESTING IN DEBENTURES?

INVESTING IN DEBENTURES? INVESTING IN DEBENTURES? Independent guide for investors reading a prospectus for unlisted debentures This guide is for you, whether you re an experienced investor or just starting out. About ASIC The

More information

ALLOCATION STRATEGIES A, C, & I SHARES PROSPECTUS August 1, 2015

ALLOCATION STRATEGIES A, C, & I SHARES PROSPECTUS August 1, 2015 ALLOCATION STRATEGIES A, C, & I SHARES PROSPECTUS August 1, 2015 Investment Adviser: RidgeWorth Investments A Shares C Shares I Shares Aggressive Growth Allocation Strategy SLAAX CLVLX CVMGX Conservative

More information

Bond Valuation. Capital Budgeting and Corporate Objectives

Bond Valuation. Capital Budgeting and Corporate Objectives Bond Valuation Capital Budgeting and Corporate Objectives Professor Ron Kaniel Simon School of Business University of Rochester 1 Bond Valuation An Overview Introduction to bonds and bond markets» What

More information

Chapter 11. Stocks and Bonds. How does this distribution work? An example. What form do the distributions to common shareholders take?

Chapter 11. Stocks and Bonds. How does this distribution work? An example. What form do the distributions to common shareholders take? Chapter 11. Stocks and Bonds Chapter Objectives To identify basic shareholder rights and the means by which corporations make distributions to shareholders To recognize the investment opportunities in

More information

High-yield bonds. Bonds that potentially reward investors for taking additional risk. High-yield bond basics

High-yield bonds. Bonds that potentially reward investors for taking additional risk. High-yield bond basics High-yield bonds Bonds that potentially reward investors for taking additional risk Types of high-yield bonds Types of high-yield bonds include: Cash-pay bonds. Known as plain vanilla bonds, these bonds

More information

Web. Chapter FINANCIAL INSTITUTIONS AND MARKETS

Web. Chapter FINANCIAL INSTITUTIONS AND MARKETS FINANCIAL INSTITUTIONS AND MARKETS T Chapter Summary Chapter Web he Web Chapter provides an overview of the various financial institutions and markets that serve managers of firms and investors who invest

More information

INSTITUTIONAL INVESTMENT & FIDUCIARY SERVICES: Building a Better Portfolio: The Case for High Yield Bonds

INSTITUTIONAL INVESTMENT & FIDUCIARY SERVICES: Building a Better Portfolio: The Case for High Yield Bonds 14\GBS\22\25062C.docx INSTITUTIONAL INVESTMENT & FIDUCIARY SERVICES: Building a Better Portfolio: The Case for High Yield Bonds By Adam Marks, Area Vice President and Jamia Canlas, Senior Analyst By looking

More information

January 2008. Bonds. An introduction to bond basics

January 2008. Bonds. An introduction to bond basics January 2008 Bonds An introduction to bond basics The information contained in this publication is for general information purposes only and is not intended by the Investment Industry Association of Canada

More information

How To Invest In Stocks And Bonds

How To Invest In Stocks And Bonds Review for Exam 1 Instructions: Please read carefully The exam will have 21 multiple choice questions and 5 work problems. Questions in the multiple choice section will be either concept or calculation

More information

How Property/Casualty Insurance Companies Invest Premium Dollars

How Property/Casualty Insurance Companies Invest Premium Dollars How Property/Casualty Insurance Companies Invest Premium Dollars OVERVIEW Every day, property/casualty insurers enable our economy to function by helping individuals and businesses address the various

More information

Investing Offers Rewards And Poses Risks. Investment Basics: The Power of Compounding. How Do Americans Invest Their Savings? (HA)

Investing Offers Rewards And Poses Risks. Investment Basics: The Power of Compounding. How Do Americans Invest Their Savings? (HA) How Do Americans Invest Their Savings? (HA) Learning how to save money for future use is an important first step in reaching your long-term goals. But saving alone is not enough. You will also need to

More information

TD ASSET MANAGEMENT USA FUNDS INC. TDAM U.S. Equity Shareholder Yield Fund. TDAM U.S. Large Cap Core Equity Fund

TD ASSET MANAGEMENT USA FUNDS INC. TDAM U.S. Equity Shareholder Yield Fund. TDAM U.S. Large Cap Core Equity Fund TD ASSET MANAGEMENT USA FUNDS INC. TDAM U.S. Equity Shareholder Yield Fund TDAM U.S. Large Cap Core Equity Fund TDAM Global Equity Shareholder Yield Fund TDAM Global All Cap Fund TDAM U.S. Small-Mid Cap

More information

Investing On a Shoestring

Investing On a Shoestring FCS5-440 Investing On a Shoestring Suzanne Badenhop, Family and Consumer Sciences Everyone should put money away for future use. When money is put away for future use, the intent is that it will increase

More information

A guide to investing in high-yield bonds

A guide to investing in high-yield bonds A guide to investing in high-yield bonds What you should know before you buy Are high-yield bonds suitable for you? High-yield bonds are designed for investors who: Can accept additional risks of investing

More information

Bond Valuation. FINANCE 350 Global Financial Management. Professor Alon Brav Fuqua School of Business Duke University. Bond Valuation: An Overview

Bond Valuation. FINANCE 350 Global Financial Management. Professor Alon Brav Fuqua School of Business Duke University. Bond Valuation: An Overview Bond Valuation FINANCE 350 Global Financial Management Professor Alon Brav Fuqua School of Business Duke University 1 Bond Valuation: An Overview Bond Markets What are they? How big? How important? Valuation

More information

Life Insurer Financial Profile

Life Insurer Financial Profile Life Insurer Financial Profile Company Ratings A.M. Best Company (Best's Rating, 15 ratings) Standard & Poor's (Financial Strength, 20 ratings) Moody's (Financial Strength, 21 ratings) Fitch Ratings(Financial

More information

Investor Guide to Bonds

Investor Guide to Bonds Investor Guide Investor Guide to Bonds threadneedle.com Introduction Why invest in bonds? Although your capital is normally considered safe in a traditional deposit account, low interest rates have eroded

More information

Life Insurer Financial Profile

Life Insurer Financial Profile Life Insurer Financial Profile Company Ratings A.M. Best Company (Best's Rating, 15 ratings) Standard & Poor's (Financial Strength, 20 ratings) Moody's (Financial Strength, 21 ratings) Fitch Ratings(Financial

More information

A guide to investing in high-yield bonds

A guide to investing in high-yield bonds A guide to investing in high-yield bonds What you should know before you buy Are high-yield bonds suitable for you? High-yield bonds are designed for investors who: Can accept additional risks of investing

More information

Investing Test - MoneyPower

Investing Test - MoneyPower Investing Test - MoneyPower Multiple Choice Identify the choice that best completes the statement or answers the question. 1. A pharmacy is to drugs as the American Stock Exchange is to: a. Interest c.

More information

Chapter 10. Fixed Income Markets. Fixed-Income Securities

Chapter 10. Fixed Income Markets. Fixed-Income Securities Chapter 10 Fixed-Income Securities Bond: Tradable security that promises to make a pre-specified series of payments over time. Straight bond makes fixed coupon and principal payment. Bonds are traded mainly

More information

Public Employees Individual Retirement Account Fund/Deferred Compensation Plan (A Component Unit of the State of Alabama)

Public Employees Individual Retirement Account Fund/Deferred Compensation Plan (A Component Unit of the State of Alabama) Public Employees Individual Retirement Account Fund/Deferred Compensation Plan (A Component Unit of the State of Alabama) FINANCIAL STATEMENTS For the Fiscal Year Ended September 30, 2014 201 South Union

More information

Investments GUIDE TO FUND RISKS

Investments GUIDE TO FUND RISKS Investments GUIDE TO FUND RISKS CONTENTS Making sense of risk 3 General risks 5 Fund specific risks 6 Useful definitions 9 2 MAKING SENSE OF RISK Understanding all the risks involved when selecting an

More information

Investors Chronicle Roadshow 2011. Trading Bonds on the London Stock Exchange

Investors Chronicle Roadshow 2011. Trading Bonds on the London Stock Exchange Investors Chronicle Roadshow 2011 Trading Bonds on the London Stock Exchange Agenda How do bonds work? Risks associated with bonds Order book for Retail Bonds London Stock Exchange Website Tools 2 How

More information

Athens University of Economics and Business

Athens University of Economics and Business Athens University of Economics and Business MSc in International Shipping, Finance and Management Corporate Finance George Leledakis An Overview of Corporate Financing Topics Covered Corporate Structure

More information

Activity Sheet 1: What is a Stock?

Activity Sheet 1: What is a Stock? Activity Sheet 1: What is a Stock? Stocks represent a share of ownership in a publicly held company. Private companies do not issue stock. As a stockholder, the investor has a claim on the assets of the

More information

Lecture Notes on MONEY, BANKING, AND FINANCIAL MARKETS. Peter N. Ireland Department of Economics Boston College. irelandp@bc.edu

Lecture Notes on MONEY, BANKING, AND FINANCIAL MARKETS. Peter N. Ireland Department of Economics Boston College. irelandp@bc.edu Lecture Notes on MONEY, BANKING, AND FINANCIAL MARKETS Peter N. Ireland Department of Economics Boston College irelandp@bc.edu http://www2.bc.edu/~irelandp/ec261.html Chapter 2: An Overview of the Financial

More information

Interest Rates and Bond Valuation

Interest Rates and Bond Valuation Interest Rates and Bond Valuation Chapter 6 Key Concepts and Skills Know the important bond features and bond types Understand bond values and why they fluctuate Understand bond ratings and what they mean

More information

PFIN 12: Buying and Selling Investments 78

PFIN 12: Buying and Selling Investments 78 PFIN 12: Buying and Selling Investments 78 12-1 Researching Investments OBJECTIVES Describe the types of financial information found in magazines, newspapers, and newsletters. Describe the type of data

More information

Life Insurer Financial Profile

Life Insurer Financial Profile Life Insurer Financial Profile Company New York Life Ins Northwestern Massachusetts John Hancock Life Mutual of Omaha Lincoln National Pacific Life Ins Co Genworth Life Ins Co Long Term Care Mutual Life

More information

Topics in Chapter. Key features of bonds Bond valuation Measuring yield Assessing risk

Topics in Chapter. Key features of bonds Bond valuation Measuring yield Assessing risk Bond Valuation 1 Topics in Chapter Key features of bonds Bond valuation Measuring yield Assessing risk 2 Determinants of Intrinsic Value: The Cost of Debt Net operating profit after taxes Free cash flow

More information

PowerShares Smart Beta Income Portfolio 2016-1 PowerShares Smart Beta Growth & Income Portfolio 2016-1 PowerShares Smart Beta Growth Portfolio 2016-1

PowerShares Smart Beta Income Portfolio 2016-1 PowerShares Smart Beta Growth & Income Portfolio 2016-1 PowerShares Smart Beta Growth Portfolio 2016-1 PowerShares Smart Beta Income Portfolio 2016-1 PowerShares Smart Beta Growth & Income Portfolio 2016-1 PowerShares Smart Beta Growth Portfolio 2016-1 The unit investment trusts named above (the Portfolios

More information

Chapter 11: Financial Markets Section 3

Chapter 11: Financial Markets Section 3 Chapter 11: Financial Markets Section 3 Objectives 1. Identify the benefits and risks of buying stocks. 2. Describe how stocks are traded. 3. Explain how stock performance is measured. 4. Describe the

More information

Seix Total Return Bond Fund

Seix Total Return Bond Fund Summary Prospectus Seix Total Return Bond Fund AUGUST 1, 2015 (AS REVISED FEBRUARY 1, 2016) Class / Ticker Symbol A / CBPSX R / SCBLX I / SAMFX IS / SAMZX Before you invest, you may want to review the

More information

CHAPTER 9 DEBT SECURITIES. by Lee M. Dunham, PhD, CFA, and Vijay Singal, PhD, CFA

CHAPTER 9 DEBT SECURITIES. by Lee M. Dunham, PhD, CFA, and Vijay Singal, PhD, CFA CHAPTER 9 DEBT SECURITIES by Lee M. Dunham, PhD, CFA, and Vijay Singal, PhD, CFA LEARNING OUTCOMES After completing this chapter, you should be able to do the following: a Identify issuers of debt securities;

More information

investor s guide BOND BASICS

investor s guide BOND BASICS investor s guide BOND BASICS CONTENTS What Are Bonds? 1 Why Invest in Bonds? 1 Key Bond Investment Considerations 2 How to Invest 13 Investment Strategy Considerations 17 For More Information 19 Glossary

More information

Developing a Financial Plan

Developing a Financial Plan Developing a Financial Plan What should my long term financial goals be? The first step is to figure out a realistic financial goal for yourself and your family. Talk with your loved ones to ensure that

More information

BOND - Security that obligates the issuer to make specified payments to the bondholder.

BOND - Security that obligates the issuer to make specified payments to the bondholder. Bond Valuation BOND - Security that obligates the issuer to make specified payments to the bondholder. COUPON - The interest payments paid to the bondholder. FACE VALUE - Payment at the maturity of the

More information

Important Information about Investing in Bonds

Important Information about Investing in Bonds Robert W. Baird & Co. Incorporated Important Information about Investing in Bonds Baird has prepared this document to help you understand the characteristics and risks associated with bonds and other fixed

More information

Investing. Making your money work for you. Inside... investing. Your investment profile. Kinds of investments. Getting the right advice

Investing. Making your money work for you. Inside... investing. Your investment profile. Kinds of investments. Getting the right advice investing Investing Making your money work for you Inside... Your investment profile Kinds of investments Getting the right advice Tips for safer investing Your investment profile Investing is all about

More information

City National Rochdale High Yield Bond Fund a series of City National Rochdale Funds

City National Rochdale High Yield Bond Fund a series of City National Rochdale Funds City National Rochdale High Yield Bond Fund a series of City National Rochdale Funds SUMMARY PROSPECTUS DATED JANUARY 31, 2015, AS SUPPLEMENTED MAY 1, 2015 Class: Institutional Class Servicing Class Class

More information

Equity Investing Evolved Manage risk, stay invested

Equity Investing Evolved Manage risk, stay invested Equity Investing Evolved Manage risk, stay invested HSBC Buffered Strategies Are you on track to meet your retirement and investment goals? Have extreme market swings prevented you from investing? Would

More information

INVESTMENT DICTIONARY

INVESTMENT DICTIONARY INVESTMENT DICTIONARY Annual Report An annual report is a document that offers information about the company s activities and operations and contains financial details, cash flow statement, profit and

More information

Bonds, Preferred Stock, and Common Stock

Bonds, Preferred Stock, and Common Stock Bonds, Preferred Stock, and Common Stock I. Bonds 1. An investor has a required rate of return of 4% on a 1-year discount bond with a $100 face value. What is the most the investor would pay for 2. An

More information

Investment Education Series

Investment Education Series Investment Education Series Types of Investment Funds Introduction Investment fund basically refers to a pool of funds, but our focus in this edition of GTBAM education series is to highlight the features,

More information

O R S G U I D E S T I N T A HIGH YIELD BONDS. Investing for. Attractive Yields and. Diversification

O R S G U I D E S T I N T A HIGH YIELD BONDS. Investing for. Attractive Yields and. Diversification I N V E S T O R S G U I D E N T A O HIGH YIELD BONDS Investing for Attractive Yields and Diversification C O N T E N T S What Are High-Yield Bonds? 1 Investing in High-Yield Bonds 1 How Do Credit Ratings

More information

Interest Rates and Bond Valuation

Interest Rates and Bond Valuation and Bond Valuation 1 Bonds Debt Instrument Bondholders are lending the corporation money for some stated period of time. Liquid Asset Corporate Bonds can be traded in the secondary market. Price at which

More information

account statement a record of transactions in an account at a financial institution, usually provided each month

account statement a record of transactions in an account at a financial institution, usually provided each month GLOSSARY GLOSSARY Following are definitions for key words as they are used in the financial life skills resource. They may have different or additional meanings in other contexts. A account an arrangement

More information

1 Regional Bank Regional banks specialize in consumer and commercial products within one region of a country, such as a state or within a group of states. A regional bank is smaller than a bank that operates

More information

ETF Investment Solutions How to Target the Bond Market s Sweet Spot with Crossover Bonds

ETF Investment Solutions How to Target the Bond Market s Sweet Spot with Crossover Bonds ETF Investment Solutions How to Target the Bond Market s Sweet Spot with Crossover Bonds CONTENTS I. ASSET CLASS BACKGROUND What Are Crossover Bonds? II. CHARACTERISTICS OF CROSSOVER BONDS What Are the

More information

Federated New York Municipal Income Fund

Federated New York Municipal Income Fund Summary Prospectus October 31, 2015 Share Class A B Ticker NYIFX NYIBX Federated New York Municipal Income Fund A Portfolio of Federated Municipal Securities Income Trust Before you invest, you may want

More information

MONEY MARKET FUND GLOSSARY

MONEY MARKET FUND GLOSSARY MONEY MARKET FUND GLOSSARY 1-day SEC yield: The calculation is similar to the 7-day Yield, only covering a one day time frame. To calculate the 1-day yield, take the net interest income earned by the fund

More information

ALAMEDA COUNTY Annual Investment Policy Calendar Year 2016

ALAMEDA COUNTY Annual Investment Policy Calendar Year 2016 ALAMEDA COUNTY Annual Investment Policy Calendar Year 2016 Introduction The Alameda County Board of Supervisors, by Ordinance # O-2015-56 dated, November 17, 2015 has renewed the annual delegation of its

More information

Corporate bonds made simple

Corporate bonds made simple Corporate bonds made simple Foreword What is fixed income? Chapter 1: Why should you consider fixed income? Chapter 2: Fixed income features that you need to know Chapter 3: Fixed income products Chapter

More information

JA Take Stock In Your Future Session Two

JA Take Stock In Your Future Session Two JA Take Stock In Your Future Session Two Objectives You will be able to: Identify pieces of information from a stock table (Section 2); Use that information to distinguish if the stock would be a suitable

More information

Galveston Community College Summary of Investments

Galveston Community College Summary of Investments Galveston Community College Summary of Investments August 31, 2003 August 31, 2003 Book Value Market Value Equity Securities: U.S. Common Stock Equity Mutual Funds Other Equity Securities (list) Total

More information

Answers to Concepts in Review

Answers to Concepts in Review Answers to Concepts in Review 1. (a) In the money market, short-term securities such as CDs, T-bills, and banker s acceptances are traded. Long-term securities such as stocks and bonds are traded in the

More information

Review for Exam 1. Instructions: Please read carefully

Review for Exam 1. Instructions: Please read carefully Review for Exam 1 Instructions: Please read carefully The exam will have 25 multiple choice questions and 5 work problems covering chapter 1, 2, 3, 4, 14, 16. Questions in the multiple choice section will

More information

Bond Investing. Plain Talk Library

Bond Investing. Plain Talk Library Plain Talk Library Contents Introducing bonds 1 What is a bond? 1 Types of bonds 3 How do bonds work? 4 How interest rates affect bond prices 5 Investing in bonds 6 Bond credit ratings 9 What role do bonds

More information

Bonds and Mutual Funds

Bonds and Mutual Funds CHAPTER10 Bonds and Mutual Funds $ What You ll Learn When you have completed this chapter, you will be able to: Section 10.1 Describe the characteristics of corporate bonds. Identify the reasons corporations

More information

Financial Structure and International Debt Market

Financial Structure and International Debt Market Financial Structure and International Debt Market 1. Optimal Financial i lstructure 2. Financial Structure of Foreign Subsidiaries 3. Debt Management and Funding Goal 4. International Debt Markets 5. Rating

More information

Investments at a glance

Investments at a glance Investments at a glance Canadian Securities Administrators Securities regulators from each province and territory have teamed up to form the Canadian Securities Administrators, or CSA for short. The CSA

More information

http://www.investopedia.com/university/bonds/ Thanks very much for downloading the printable version of this tutorial.

http://www.investopedia.com/university/bonds/ Thanks very much for downloading the printable version of this tutorial. Bond Basics Tutorial http://www.investopedia.com/university/bonds/ Thanks very much for downloading the printable version of this tutorial. As always, we welcome any feedback or suggestions. http://www.investopedia.com/contact.aspx

More information

OAKTREE HIGH YIELD BOND FUND

OAKTREE HIGH YIELD BOND FUND OAKTREE HIGH YIELD BOND FUND Institutional Class OHYIX Advisor Class OHYDX Before you invest, you may want to review the Fund s prospectus, which contains more information about the Fund and its risks.

More information

i T-bill (dy) = $10,000 - $9,765 360 = 6.768% $10,000 125

i T-bill (dy) = $10,000 - $9,765 360 = 6.768% $10,000 125 Answers to Chapter 5 Questions 1. First, money market instruments are generally sold in large denominations (often in units of $1 million to $10 million). Most money market participants want or need to

More information

Balanced fund: A mutual fund with a mix of stocks and bonds. It offers safety of principal, regular income and modest growth.

Balanced fund: A mutual fund with a mix of stocks and bonds. It offers safety of principal, regular income and modest growth. Wealth for Life Glossary Aggressive growth fund: A mutual fund that aims for the highest capital gains. They often invest in smaller emerging companies that offer maximum growth potential. Adjustable Rate

More information

I. Introduction. II. Financial Markets (Direct Finance) A. How the Financial Market Works. B. The Debt Market (Bond Market)

I. Introduction. II. Financial Markets (Direct Finance) A. How the Financial Market Works. B. The Debt Market (Bond Market) University of California, Merced EC 121-Money and Banking Chapter 2 Lecture otes Professor Jason Lee I. Introduction In economics, investment is defined as an increase in the capital stock. This is important

More information

Chapter 6 Valuing Bonds. (1) coupon payment - interest payment (coupon rate * principal) - usually paid every 6 months.

Chapter 6 Valuing Bonds. (1) coupon payment - interest payment (coupon rate * principal) - usually paid every 6 months. Chapter 6 Valuing Bonds Bond Valuation - value the cash flows (1) coupon payment - interest payment (coupon rate * principal) - usually paid every 6 months. (2) maturity value = principal or par value

More information

Five Things To Know About Shares

Five Things To Know About Shares Introduction Trading in shares has become an integral part of people s lives. However, the complex world of shares, bonds and mutual funds can be intimidating for many who still do not know what they are,

More information

SPDR Nuveen S&P High Yield Municipal Bond ETF

SPDR Nuveen S&P High Yield Municipal Bond ETF SPDR Nuveen S&P High Yield Municipal Bond ETF Summary Prospectus-October 31, 2015 HYMB (NYSE Ticker) Before you invest in the SPDR Nuveen S&P High Yield Municipal Bond ETF (the Fund ), you may want to

More information

Virtual Stock Market Game Glossary

Virtual Stock Market Game Glossary Virtual Stock Market Game Glossary American Stock Exchange-AMEX An open auction market similar to the NYSE where buyers and sellers compete in a centralized marketplace. The AMEX typically lists small

More information

March 2008. Bonds. More on bond investing

March 2008. Bonds. More on bond investing March 2008 Bonds More on bond investing The information contained in this publication is for general information purposes only and is not intended by the Investment Industry Association of Canada as investment

More information

COMMUNITY FOUNDATION OF GREATER MEMPHIS, INC. INVESTMENT GUIDELINES FOR MONEY MARKET POOL

COMMUNITY FOUNDATION OF GREATER MEMPHIS, INC. INVESTMENT GUIDELINES FOR MONEY MARKET POOL INVESTMENT GUIDELINES FOR MONEY MARKET POOL discretionary Money Market Pool is expected to pursue their stated investment strategy and follow the investment guidelines and objectives set forth herein.

More information

CHAPTER 2: THE CANADIAN SECURITIES INDUSTRY

CHAPTER 2: THE CANADIAN SECURITIES INDUSTRY CHAPTER 2: THE CANADIAN SECURITIES INDUSTRY Topic One: Industry Overview 1. Self-regulatory Organizations (SROs). A. The SROs set rules that govern the operations of investment dealers and market activity.

More information

SUMMARY PROSPECTUS. TCW Emerging Markets Multi-Asset Opportunities Fund FEBRUARY 29 I SHARE: TGMAX N SHARE: TGMEX

SUMMARY PROSPECTUS. TCW Emerging Markets Multi-Asset Opportunities Fund FEBRUARY 29 I SHARE: TGMAX N SHARE: TGMEX TCW Emerging Markets Multi-Asset Opportunities Fund I SHARE: TGMAX N SHARE: TGMEX 20 6 FEBRUARY 29 SUMMARY PROSPECTUS Before you invest, you may want to review the Fund s Prospectus which contain more

More information

Basic Investment Terms

Basic Investment Terms Because money doesn t come with instructions.sm Robert C. Eddy, CFP Margaret F. Eddy, CFP Matthew B. Showley, CFP Basic Investment Terms ANNUITY A financial product sold by financial institutions pay out

More information

A KIDS GUIDE TO STOCKS AND OTHER INVESTMENTS

A KIDS GUIDE TO STOCKS AND OTHER INVESTMENTS A KIDS GUIDE TO STOCKS AND OTHER INVESTMENTS Recommended for students ages nine through 12 You can do many things with the money you will earn and save during your lifetime. For example, you can put it

More information

THE STOCK MARKET GAME GLOSSARY

THE STOCK MARKET GAME GLOSSARY THE STOCK MARKET GAME GLOSSARY Accounting: A method of recording a company s financial activity and arranging the information in reports that make the information understandable. Accounts payable: The

More information

Investing in Stocks 14-1. Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

Investing in Stocks 14-1. Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Investing in Stocks McGraw-Hill/Irwin Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved. 14-1 Invest in stocks Learning Objectives Identify the most important features of common and

More information

Investment Appendix. 1. General investment risks. 1.3. What is currency risk? 1.4. What is market risk? 1.1. What is price risk?

Investment Appendix. 1. General investment risks. 1.3. What is currency risk? 1.4. What is market risk? 1.1. What is price risk? Investment Appendix This is a translation of the original Dutch text. This translation is furnished for the customer s convenience only. The original Dutch text will be binding and shall prevail in case

More information

Wealth Management Education Series. Cultivate an Understanding of Bonds

Wealth Management Education Series. Cultivate an Understanding of Bonds Wealth Management Education Series Cultivate an Understanding of Bonds Wealth Management Education Series Cultivate an Understanding of Bonds Managing your wealth well is like tending a beautiful formal

More information

Chapter 3 - Selecting Investments in a Global Market

Chapter 3 - Selecting Investments in a Global Market Chapter 3 - Selecting Investments in a Global Market Questions to be answered: Why should investors have a global perspective regarding their investments? What has happened to the relative size of U.S.

More information

Saving and Investing Tools

Saving and Investing Tools STUDENT MODULE 5.3 SAVING AND INVESTING PAGE 1 Standard 5: The student will analyze the costs and benefits of saving and investing. Saving and Investing Tools Miley and Hanna are both turning 16 this year

More information