Financial Markets & Investment Analysis

how money gets from one person/entity that would like to loan excess funds to another person/entity

• 1. Retained Earnings - earnings saved from prior periods
• 2. Borrow from bank or lender (interest must be paid)
• 3. Sell ownership in business (shares)

• Bond: legal agreement between lender and borrower when business firms borrow from the public
• Stock: clain of partial ownership of a business firm

• Primary: company issues a stock/bond
• Secondary: company's stock/bond is traded

• NYSE - New York Stock Exchange
• NASDAQ - National Association of Securities Dealers Automated Quotations

consisted of shareholders who elect a Board of Governors to represent interests which can hire/fire CEOs

where a company switches from private ownership to a publically traded corporation

• 1.Value the Company
• 2. Roadshow to Generate Interest
• 3. Register with the Securities Exchange Commision (SEC)
• 4. Issue Stock 

announcement that a corporation is selling shares of it's stock to the public

financial firms that buy newly issued stock from corporations in wholesale and sell to public, collect the difference between retail and wholesale

practice of simultaneously buying and selling single product on two different markets to profit from price differential between the two markets

• Bid: highest current offer to buy stock
• Ask: lowest current offer to buy stock

instruction for broker to buy or sell stock at the best price possible

instruction for broker to buy at no more or sell at no less than some specified price  

a limit order that is cancelled at the end of the day if not executed

a limit order that stands untill executed or cancelled

instruction for a broker to sell a stock if the price falls below a specified level

• Investors: buyer of stock with long-run objective of capital appreciation and/or dividends
• Speculators: buyer/seller of stock with short-run objectives of making a quick profit by buying low and selling high

professionally managed investment company that accepts funds from investors and invests those funds on behalf of the investors

several different mutual funds with different investment objectives managed by a single manager

listing of the items currently held by a mutual fund on behalf of the investors 

current value of a mutual fund's portfolio divided by number of shares of the mutual fund

mutual fund that will issue additional shares of the fund whenever additional investment funds are recieved; number of shares of fund is unlimited

mutual fund with a fixed number of shares such that when one investor buys shares another must sell.

• DJIA - price-weighted index
• S&P 500 - market-value weighted

when expectations for a stock start to deviate and cause price jumps and falls with stocks

• Technical - don't care why moving up or down with stock just that its moving
• Fundamental - derive a value for the company based on financial facts