INVESTMENTS

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shorunke86
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66736
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INVESTMENTS
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2011-02-17 02:23:20
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INVESTMENTS
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INVESTMENTS
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  1. WHAT IS AN INVESTMENT?
    THE CURRENT COMMITMENT OF MONEY OR OTHER RESOURCES IN THE EXPECTATION OF REAPING FUTURE BENEFITS.
  2. WHAT IS A REAL ASSET?
    ASSETS WHETHER TANGIBLE OR NOT USED TO PRODUCE GOODS OR SERVICES
  3. WHAT IS A FINANCIAL ASSET?
    CLAIMS ON REAL ASSETS OR THE INCOME GENERATED BY THEM.
  4. EXAMPLES OF REAL ASSETS
    • LAND
    • BUILDING
    • COMPUTER
    • PATENT
    • COLLEGE EDUCATION
  5. EXAMPLES OF FINANCIAL ASSETS
    • STOCKS
    • COMMON STOCK
    • PREFERRED STOCK
    • DEBT SECURITIES
    • MONEY MARLET SECURITIES
    • BONDS
    • DERIVATIVE SECURITIES
    • OPTIONS AND FUTURES
    • LOANS
    • DEPOSITS
    • $10 BILL
  6. WHAT DOES ASSET ALLOCATION DESCRIBE?
    STOCKS OR BONDS
  7. SECURITY SELECTION?
    GOOGLE OR YAHOO
  8. WHAT IS TOP DOWN STRATEGY?
    START WITH ASSET ALLOCATION
  9. WHAT IS BOTTOM UP STRATEGY?
    START WITH SECURITY SELECTION (google or yahoo)
  10. WHAT IS A PORTFOLIO?
    A COLLECTION OF SECURITIES
  11. WHAT IS ACTIVE MANAGEMENT?
    FINDING MISPRICED SECURITIES

    EXPLICIT TIMING
  12. WHAT IS PASSIVE MANAGEMENT?
    • NO ATTEMPT TO FIND MISPRICEd SECURITIES
    • NO EXPLICIT TIMING
    • HOLDING A DIVERSIFIED PORTFOLIO
  13. PRIMARY MARKET
    NEW ISSUES OF SECURITIES ARE OFFERED TO THE PUBLIC. (IPOS)
  14. SECONDARY MARKET
    TRADING OF ALREADY ISSUED SECURITIES AMONG INVESTORS

    NYSE, NASDAQ, BATS, DIRECT EDGE
  15. CHARACTERISTICS OF MONEY MARKET SECURITIES
    • SHORT TERM (MATURE IN LESS THAN ONE YEAR)
    • EASILY MARKETABLE (HIGHLY LIQUID)
    • RELATIVELY LOW RISK

    FREQUENTLY CALLED CASH EQUIVALENTS
  16. TREASURY BILLS (T-BILL) CHARACTERISTICS
    • ISSUED BY US GOVT
    • 52 WEEKS IN DURATION OR LESS (4,13,26,52)
    • MOST MARKETABLE, HIGHLLY LIQUID
    • SOLD AT DISCOUNT TO FACE VALUE
    • FACE VALUE PAID AT MATURITY
    • EXEMPT FROM LOCAL AND STATE TAXES
    • DENOMINATIONS OF $100
  17. CHARACTERISTICS OF CERTIFICATES OF DEPOSIT INSTRUMENTS
    • TIME DEPOSIT WITH A BANK
    • NEGOTIABLE FOR LARGE ONES (NCD>$100,000)
  18. CHARACTERISTICS OF COMMERCIAL PAPER
    • ISSUED BY LARGE CORPORATIONS
    • MOSTLY 270 DAYS OR LESS(over 270 must register with SEC)
    • USUALLY IN MULTIPLES OF $100
    • RATED FOR CREDIT QUALITY BY RATING AGENCIES
  19. CHARACTERISTICS OF BANKERS ACCEPTANCE
    AN ORDER TO A BANK TO PAY A SUM OF MONEY AT A FUTURE DATE.

    TRADABLE AND SAFE WITH BANK GUARANTEE

    USUALLY CREATED DURING INTERNATIONAL TRADES
  20. CHARACTERISTICS OF EURODOLLARS
    
    DOLLAR DENOMINATED DEPOSITS IN FOREIGN BRANCHES OF AMERICN BANKS

    ESCAPE REGULATION FROM FEDERAL RESERVE BOARD
  21. CHARACTERISTICS OF REPURCHASE AGREEMENTS
    • SHORT TERM SALES OF GOVERNMENT SECURITIES WITH AN AGREEMENT TO REPURCHASE THE SECURITIES AT A HIGHER PRICE IN THE FUTURE
    • (RESERVE REPOS IS TO BUY FIRST AND AGREE TO SELL BACK.)
  22. CHARACTERISTICS FEDERAL FUNDS
    FUNDS IN THE ACCOUNTS OF DEPOSITORY INSTITUTIONS AT THE FEDERAL RESERVE DISTRICT BANKS ( THE BANKS RESERVES)
  23. CHARACTERISTICS OF LIBOR
    LONDON INTERBANK OFFER RATE

    SHORT TERM LENDING RATE AMONG BANKS IN THE LONDON MARKET

    WIDELY USED AS A REFERENCE RATE FOR FINANCIAL TRANSACTIONS AROUND THE WORLD
  24. CHARACTERISTICS T-NOTES
    • UP TO 10 YEARS
    • 2,3,5,7, AND 10 YEARS
  25. CHARACTERISTICS OF T-BONDS
    • 30 YEARS
    • MAY BE CALLABLE
  26. CHARACTERISTICS OF
    T- NOTES AND BONDS
    • SEMIANNUAL COUPON PAYMENTS
    • DENOMINATION OF $100
    • QUOTATION IN PERCENTAGE OF PAR VALUE WITH AN INCREMENT OF 1/32 OF A PERCENTAGE POINT
  27. WHAT IS A MARKET ORDER?
    TO EXECUTE AT THE AVAILABLE PRICE
  28. WHAT IS A LIMIT ORDER?
    TO EXECUTE AT A PRICE AS OR BETTER THAN SPECIFIED
  29. WHAT IS A STOP LOSS ORDER?
    CONTINGENT ORDER
  30. COMMISSION
    FEES PAID TO A BROKER FOR MAKING THE TRANSACTION
  31. SPREAD?
    ASK-BID
  32. WHAT IS ASK?
    BEST QUOTED SELLING PRICE
  33. WHAT IS BID?
    BEST QUOTED BUYING PRICE
  34. CORPORATE BONDS
    • THEY PAY SEMIANNUAL BONDS
    • SECURED ( BONDS WITH COLLATERAL(HIGHEST PRIORITY))

    UNSECURED (NO CALLATERAL, 2ND HIGHEST PRIORITY)

    SUBORDINATED DEBENTURES (NO COLL. LOWER PRIORITY THAN UNSECURED)
  35. EQUATION CURRENT YIELD? (Y)
    Y=ANNUAL COUPON INCOME/PRICE
  36. CHARACTERISTICS OF COMMON STOCK?
    RESIDUAL CLAIM ( WHATEVER IS LEFT)

    LIMITED LIABILITY (THE MOST YOU CAN LOSE IS WHAT YOU PUT IN)

    VOTING RIGHTS (VOTE FOR BOARD OF DIRECTORS)

    • SHARE CLASS
    • CLASS A 1 SHARE 1 VOTE
    • CLASS B 1 SHARE 10 VOTES
  37. CHARACTERISTICS OF PREFERRED STOCKS
    FIXED DIVIDENDS

    CUMULATIVE PROVISION

    PRIORITY OVER COMMON STOCKS
  38. WHAT IS A CALL OPTION?
    THE RIGHT TO BUY THE UNDERLYING ASSET FOR A SPECIFIED PRICE ON OR BEFORE A SPECIFIED DATE
  39. WHAT IS A PUT OPTION?
    THE RIGHT TO SELL THE UNDERLYING ASSET FOR A SPECIFIED PRICE ON OR BEFORE A SPECIFIED DATE
  40. WHAT IS THE RATIONALE ON OPTIONS?
    OPTION BUYERS HAVE THE RIGHTS, BUT OPTION SELLERS HAVE THE OBLIGATION
  41. WHAT ARE ORGANIZED EXCHANGES?
    AUCTION MARKETS WITH CENTRALIZED ORDER FLOWS

    DEALERSHIPS- BUY AND SELL FROM AN INVENTORY

    SECURITIES- STOCK, FUTURES CONTRACTS, OPYIONS, AND TO A LESSER EXTENT BONDS
  42. EXAMPLES OF ORGANIZED EXCHANGES
    NYSE, CBOE (CHICAGO BOARD OPERATIONS EXCHANGE)
  43. WHAT ARE TIPS (TREASURY INFLATION PROTECTED SECURITIES)
    INTENDE FOR INVESTORS WHO SEEK INFLATION PROTECTION

    THEY COME IN 5,10 AND 30 YEAR TIPS
  44. HOW IS THE PRINCIPAL VALUE OF THE OF TIPS DETERMINED?
    IT IOS ADJUSTED FOR THE US INFLATION RATE ( CPI INDEX MONTHLY)

    COUPON RATES LESS THAN OTHER TREASURY BONDS

    COUPON PAYMENT INCREASES WITH INFLATION
  45. WHAT ARE MUNICIPAL BONDS?
    ISSUED BY STATE AND LOCAL GOVTS

    • INTEREST INCOME IS EXEMPTED FROM FEDERAL INCOME TAXATION
    • GENERAL OBLIGATION BONDS\
    • REVENUE BONDS (RISKIER)
  46. WHAT IS A LIMIT ORDER BOOK?
    THE DISTRIBUTION OF LIMIT ORDERS IN DIFFERENT BID AND ASK PRICES
  47. WHAT IS MAXIMUM (INITIAL) MARGIN?
    THE %AGE OF MONEY YOU HAVE TO PROVIDE ON YOUR OWN

    SET BY THE FED
  48. MAINTAINENCE MARGIN?
    MINIMUM PROPORTION OF EQUITY ( YOUR OWN MONEY THAT YOU MUST MAINTAIN IN YOUR ACCOUNT
  49. WHAT IS A MARGIN CALL?
    NOTIFICATION FROM BROKER THAT YOU MUST ADD FUNDS WHEN YOUR PROPORTION OF FUNDS FALLS BELOW THE MAINTENANCE MARGIN
  50. WHAT IS A SHORT SALE?
    TO PROFIT FROM A DECLINE IN THE PRICE OF A SECURITY.
  51. WHAT IS THE SEC?
    AUTHORITY OVER SECURITY TRADING IN THE US
  52. WHO IS THE COMMODITY FUTURES TRADING COMMISSION?
    REGULATES TRADING IN THE FUTURES MARKET.
  53. WHO IS THE FEDERAL RESERVE BOARD?
    BROAD RESPONSIBILITY FOR THE HAELTH OF THE US FINANCIAL SYSTEM
  54. WHAT IS FINRA?
    FINANCIAL INDUSTRY REGULATORY AUTHORITY

    SELF REGULATORY ENTITY OF SECURITY MARKETS

    PVERSEES THE DAY TO DAY OPERATIONS OF SECURITY MARKETS WITH THE EXCHANGES (MARKET OPERATORS)
  55. WHICH ASSET CLASS HAS INTERESTS THAT ARE EXEMPTED FROM FEDERAL INCOME TAX
    MUNICIPAL BONDS
  56. WHICH ASSET CLASS HAS INTERESTS THAT ARE EXEMPT FROM STATE INCOME TAX?
    TREASURY BONDS

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