characteristics of ownership of
the underlying commonstock.
describe a mortgage loan, and explain
the cash flow characteristics of a fixedrate, level payment, and fully amortized
LOS 35g: Calculate the value of noncallable fixed-rate perpetual preferred stock;
LOS 35h: Describe strengths and limitations of the Gordon growth model, and justify its
selection to value a company’s common shares;
LOS 35i. Explain the assumptions and justify the selection of the two-stage DDM...
calculations based on this principle (e.g., present value, future value, and internal rate of return) are the basic tools used to support corporate finance decisions and estimate the fair value of fixedincome, equity, or any other type of security or investment. Similarly, the basic concepts of...
, commonstock classes, and takeover defenses explain the importance of the portfolio perspective discuss the types of investment management clients and the distinctive characteristics and needs of each describe the steps in the portfolio management process describe, compare, and contrast mutual funds...
form of Investment
Non-Security form of investment
1.5 Characteristics of Investment
1.6 Investment & Speculation
Investment & Gambling
1.7 Investment process
1.8 Common Errors in Investment Management
1.9 Qualities of a Smart Investor
1.11 Terminal Questions
like a hybrid stock because it has preferred and common dividends, but also it behaves like the corporate bonds because it has fixedincome and is non-voting characteristics. Finally, corporate bonds are instruments of debt that provide fixedincome and have non-voting characteristics.
Fixed-incomesecurities Equities Commonstock Preferred stock Derivatives Options Futures
When we examine some of these security types in more detail, we will see that the distinctions can become a little blurred, particularly with some more recently created financial instruments, and, as a result...
completing this reading, should be able to:
• • • • • • • • • • Describe four ways in which measures of fixedincome price sensitivity are used. Describe an interest rate factor and name common examples of interest rate factors. Define and compute the DV01 of a fixedincomesecurity given a change in...
saleability of an asset. Securities are listed in a stock market which are more easily marketable than which are not listed. Public Limited Companies shares are more easily transferable than those of private limited companies. Concealability Concealability is another essential characteristic of the...
requires skilled stock selection. To do this, a manager
concurrently buys and sells similar securities in an attempt to exploit relative
mispricings, while decreasing market risk.
Nonhedged equity :
This strategy is common to hedge funds, mutual funds, and other investors. There is
. Generally speaking, the term "fixedincome" is synonymous with bonds. In reality, a bond is just one type of fixedincomesecurity. The difference between the money market and the bond market is that the money market specializes in very short-term debt securities (debt that matures in less than one year...
: short term vehicles, commonstock, fixedincomesecurities, mutual funds, real estate, tangibles, tax-advantaged investments, and options and futures. The text describes their risk return characteristics in a general way. The instructor may want to expand on the advantages and disadvantages of investing...
the holder the right to purchase a certain amount of commonstock at a stated price; "as a sweetener they offered warrants along with the fixed-incomesecurities"
Rights – Voting Right - The right of a stockholder to vote on matters of corporate policy and who will make up the board of directors...
* Dividends are taxable
* Capital Gains are taxable on sale
* Investors can manage the timing of their capital gains and capital gains taxes
* Closed-End Funds
* Portfolio composed of securities
* Number of shares fixed and trades like commonstock...
Slide 3: Why Investors Purchase Mutual Funds
Learning Objective #1 Describe the characteristics of mutual fund investments.
What is a mutual fund? A mutual fund is a professionally managed pool of money invested in stocks, bonds and other securities. By...
Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations...
determine returns (i/r) Allocate capital to most efficient uses Equilibrium interest rate
a. Main functions of financial system
Financial vs. Real assets Public vs. Private securities Debt vs. Equity vs. Derivative Commonstock Equity Preferred stock Warrants Fixedincome...
II. Financial intermediaries
III. Suppliers and users of capital
IV. Industry regulators
3. Name and briefly describe two securities traded in each of the following markets.
a. The long term capital market – stocks and bonds. Stocks, both common and preferred, are claims on...
quantity of shares.
* The supply of equity shares is not fixed forever.
* With ordinary shares, the income payments will vary depending upon the success of the firm and its dividend policy.
The Behaviour of Stock Prices
* Security prices change largely as a result of shifts in...
course, to decide which investmentvehicles are suitable for you, you need to know their characteristics and why they may be suitable for a particular investing objective.
Grouped under the general category called fixed-incomesecurities, the term bond is commonly used to refer to any...