1 / 19

Chapter 2

Chapter 2 Financial Securities Financial assets can be classified as ______________________ market securities ______________________ market securities _____________________ securities Classes of Financial Assets Money market securities are sometimes referred to as ____________ equivalents.

libitha
Download Presentation

Chapter 2

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Chapter 2 Financial Securities

  2. Financial assets can be classified as • ______________________ market securities • ______________________ market securities • _____________________ securities Classes of Financial Assets

  3. Money market securities are sometimes referred to as ____________ equivalents. • Examples of money market securities: Classes of Financial Assets

  4. Capital market securities include: • Debt (bonds) • Equity • Common stock • Preferred stock • Bonds and preferred stock are referred to as fixed income securities Classes of Financial Assets

  5. Derivative securities • Options • Futures Classes of Financial Assets

  6. Bond Market • US Treasury Bonds and Notes • Agency Issues (Fed Gov) • Municipal Bonds • Corporate Bonds • Mortgage-Backed Securities Classes of Financial Assets

  7. Treasury Notes and Bonds • Notes: maturities up to ________ years • Bonds: maturities in excess of ________ years • 30-yr T-bond • 2001, Treasury suspended sales • Sales resumed in 2006 • Par value: $1,000 • Quotes: % of par Classes of Financial Assets

  8. Major issuers • Federal Home Loan Bank • Federal National Mortgage Association • Government National Mortgage Association • Federal Home Loan Mortgage Corporation Federal Agency Debt

  9. Issued by state and local governments • Types • General obligation bonds • Revenue bonds • Maturities – range up to 30 years Municipal Bonds

  10. The interest rate on munis is lower than the interest rate on comparable taxable bonds. Why? Municipal Bond Yields

  11. Issued by private firms • Semi-annual interest payments • Subject to higher _________________ risk than Treasury securities • Options in corporate bonds • callable (most) • Convertible (some) Corporate Bonds

  12. Developed in the 1970s to help liquidity of financial institutions • Proportional ownership of a pool or obligation secured by a pool • Market has experienced very high rates of growth • Recent problems in the ______________ market Mortgages and Mortgage-backed Securities

  13. Figure 2.9 Mortgage-backed Securities Outstanding

  14. Common stock • Residual claim • Limited liability • Preferred stock • Fixed dividends • Priority over common stock • Tax treatment Capital Market - Equity

  15. Measure of ______________ performance • ________________________ to evaluate investment performance • Base of derivatives Uses of Stock Indexes

  16. Representative? • Broad or narrow? • How is it weighted? Factors for Construction of Stock Indexes

  17. Dow Jones Industrial Average (30 Stocks) • Standard & Poor’s 500 Composite • NASDAQ Composite • NYSE Composite • Wilshire 5000 Examples of U.S. Stock Indexes

  18. How are stocks weighted? • Price weighted (DJIA) • Market-value weighted (S&P500, NASDAQ) • Equally weighted (Value Line Index) Construction of Indexes

  19. Relative performance of Stock market indexes

More Related