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CHAPTER 2. Asset Classes & Financial Instruments. What are we going to learn in this chapter ?. The Money Market. What is money market? What trades on money market ? How do the transactions take place ?. The Money Market. C ommercial paper A sset -backed commercial paper
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CHAPTER 2 AssetClasses & FinancialInstruments
The Money Market • What is money market? • Whattrades on money market? • How do thetransactionstakeplace?
The Money Market • Commercial paper • Asset-backed commercial paper • A banker’s acceptance • Eurodollars
The Money Market • Repo • The London Interbank Offered Rate (LIBOR) • Riskiness?
The Bond Market • Whattrades on bondmarkets? (Fixed-income capital markets) • Maturities • Yieldtomaturity
The Bond Market • US Bond yields as of Sept. 5, 2013:
The Bond Market • TreasuryInflation-Protected Securities • Federal AgencyDebt • InternationalBonds
The Bond Market • Municipal Bond • Corporate Bonds • MortgagesandMortgage-BackedSecurities
EquitySecurities • Common stocks • One vote • Board vs. management vs. owners • Residualclaim • Limited liability
PreferredStocks • Preferred stock • A fixed amount of income each year • No votingpower • No contractual obligation to pay dividends