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Financial Markets & Investment Analysis
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Financial Markets
how money gets from one person/entity that would like to loan excess funds to another person/entity
Options for Corporations to Raise Money
1. Retained Earnings - earnings saved from prior periods
2. Borrow from bank or lender (interest must be paid)
3. Sell ownership in business (shares)
Difference Between Stocks and Bonds
Bond
: legal agreement between lender and borrower when business firms borrow from the public
Stock
: clain of partial ownership of a business firm
Difference Between Primary and Secondary Market
Primary
: company
issues
a stock/bond
Secondary
: company's stock/bond is
traded
2 Stock Markets
NYSE - New York Stock Exchange
NASDAQ - National Association of Securities Dealers Automated Quotations
Describe Structure of Publically Owned Corporation
consisted of shareholders who elect a Board of Governors to represent interests which can hire/fire CEOs
Initial Public Offering (IPO)
where a company switches from private ownership to a publically traded corporation
IPO Steps
1.Value the Company
2. Roadshow to Generate Interest
3. Register with the Securities Exchange Commision (SEC)
4. Issue Stock
Tombstone
announcement that a corporation is selling shares of it's stock to the public
Underwriters
financial firms that buy newly issued stock from corporations in wholesale and sell to public, collect the difference between retail and wholesale
Arbitrage
practice of simultaneously buying and selling single product on two different markets to profit from price differential between the two markets
Difference Between Bid and Ask Prices of Stock
Bid
: highest current offer to buy stock
Ask
: lowest current offer to buy stock
Market Order
instruction for broker to buy or sell stock at the best price possible
Limit Order
instruction for broker to buy at no more or sell at no less than some specified price
Day Order
a limit order that is cancelled at the end of the day if not executed
Good 'til Cancelled Order (GTC)
a limit order that stands untill executed or cancelled
Stop Loss Order
instruction for a broker to sell a stock if the price falls below a specified level
Difference Between Investors and Speculators
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
Mutual Fund
professionally managed investment company that accepts funds from investors and invests those funds on behalf of the investors
Family of Funds
several different mutual funds with different investment objectives managed by a single manager
Portfolio
listing of the items currently held by a mutual fund on behalf of the investors
Net Asset Value (NAV)
current value of a mutual fund's portfolio divided by number of shares of the mutual fund
Open-End Fund
mutual fund that will issue additional shares of the fund whenever additional investment funds are recieved; number of shares of fund is unlimited
Closed-End Fund
mutual fund with a fixed number of shares such that when one investor buys shares another must sell.
What Kind of Index is Dow Jones, S&P 500
DJIA - price-weighted index
S&P 500 - market-value weighted
Bubble
when expectations for a stock start to deviate and cause price jumps and falls with stocks
Difference Between Technical and Fundamental Analysis
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
Author
dcwalker865
ID
185918
Card Set
Financial Markets & Investment Analysis
Description
Financial Markets & Investment Analysis
Updated
12/9/2012, 3:35:47 PM
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