chapter 16
published analysis's
Additionally, you might want to consider the opinions of Industry analysis who does independently research and analyze the investment potential of companies
debenture bonds
unsecured bonds, backed only by a corporation's promise to pay.
fundamentals
you can start by evaluating a company's fundamentals data, such as its earnings, financial statements, and key ratios
Underwriter
It arranges a firm's initial public offering (IPO) of stock.
option
It is the purchased right—but not the obligation—to buy or sell a specified number of shares of a stock at a predetermined price during a specified period.
NASDAQ
National Association of Securities Dealers Automated Quotations, world's first electronic stock exchange, and the world's second largest Stock Exchange.
NYS amex
The Exchange deals primarily with small-cap companies, exchange-traded funds, and other more advanced instruments
Securities and Exchange Commission
a US Federal agency created to protect investors and maintain fair and orderly security markets. It governs the security exchanges the people who issue, trade, and deal Securities and those who offer investment advice.
preferred stock
a class of ownership in which the preferred stockholders have a claim to assets Before Common stockholders if a firm goes out of business.
common stock
a class of ownership in which the stockholders have the right to elect a board of directors and vote on corporate policy.
prospectus
a formal legal document that provides details about an investment
no-load fund
a mutual fund that does not charge a fee for buying into the fun and selling out of it. Load funds have not shown to perform better than no-load funds so why pay more for little or no extra benefit
Futures Contract
an agreement between a buyer and a seller to receive or deliver and asset sometime in the future at a specific price agreed on today. The difference between a Futures Contract and an options contract is an options contract gives you the right to purchase the underlying asset with a Futures Contract you have an obligation to purchase the underlying asset
Capital Market
an arena where companies in governments raise long-term funds by selling stocks and bonds and other securities.
Stock Exchange
an organization that facilitates the exchange of stocks and other Securities between Brokers and Traders.
convertible bonds
another modification of traditional bonds that give a bondholder the right but not the obligation to convert the bond into a predetermined number of shares of a company stock.
secured bonds
are backed by collateral, and acid of the corporation that will pass to the bondholders if the corporation does not repay the amount borrowed.
Treasury Bonds (T-Bonds)
are bonds that mature in 30 years and pay interest semi-annually. When it Bond matures, you received the face value
floating-rate notes (FRN)
are debt instruments issued for a term of two years. FR ends pay interest quarterly. The interest payments are variable and are based on discount rates for 13 weeks he bills. The price of an FRN may not be its face value, but when an FRN matures you are paid its face value
money market funds
are the least risky because they invest in short-term debt obligations, such as t-bills and certificates of deposits. Money market funds are popular because the interest rates they earn are nearly double what interest-bearing checking or savings account earn.
income stocks
are you shoot by companies that pay large dividend such as utility companies like Duke Energy, exelon Corporation, and Exxon Mobil
u.s. savings bonds
aren't sold on the secondary Market. You can only purchase them directly from the government. Traditionally, u.s. savings bonds have been given as gifts to babies to help Finance or education once the bond matures. Saving bonds are issued at face value and as of January 1st 2012, can be purchased only electronically there are two types of savings bonds
municipal bonds (munis)
bonds issued by state or local government or governmental agencies. There are two varieties of municipal bonds, General obligation bonds and revenue bonds
Treasury Notes (T-Notes)
bonds that mature in 2, 3, 5, 7, and 10 years. Interest is paid semi-annually. You can hold T nuts to maturity, or you can sell them prior to their maturity. When a teen amateurs, you receive its face value
Treasury Bills (T-Bills)
bonds with maturities ranging from four weeks to 52 weeks. Instead of paying interest, tables are sold at a discount, so you pay less up front for them. When the bond matures, you receive the full face value of the bond.
capital gain
buying a stock at one price and then later selling the stock at a higher price.
investing
buying or otherwise obtaining an asset with the expectation of achieving a future profit.
load funds
charge additional costs that are rolled into the cost of the funds when you buy and sell them.
Bond mutual funds
consists solely of bonds. Some bonds are categorized by a type of bond, including Municipal bond funds, corporate bond funds, and US Government bond funds.
economy
current events and changes in economic conditions could affect the Stock's price, so you need to be aware of these changes
corporate bonds
debt securities issued by corporations
government bonds
debt securities issued by national governments US government bonds are considered to be the safest of Investments because of government backs them and the risk of default is very low.
dividend
distribution of a portion of the company's earnings as determined by its board of directors.
liquidity
easy to sell mutual funds. So you can get your money back quickly usually within a day.
Market risk
events such as Wars and other political turmoil, changes in interest rates, terrorist attacks, recessions, natural disasters will cause a decline in the market as a whole.
Series I bonds
have an interest rate that is part fixed and part variable. The variable part is Brisa annually to match the inflationary. In this regard, they are similar to tips
diversification
having a variety of instruments in your portfolio, such as different types of companies in different Industries.
Capital loss
if there is a decrease in value between the purchase price in the selling price
a bear Market
indicates decreasing investor confidence as the market continues to decline in value
bull market
indicates increasing investor confidence as the market continues to increase in value. In a bull market, investors are motivated by Promises of games.
blend (or balanced) funds
invest in stocks, bonds, and sometimes money market funds to offer a mixture of safety, income, and modest appreciation
exchange traded fund
is a fund that holds a collection of Investments like a mutual fund does but trades on an exchange like stocks do.
Blue Chip stocks
issued by companies that have a large history of consistent growth and stability. Blue Chip companies pay regular dividends and maintain reasonable study share prices.
cyclical stocks
issued by the companies that produce goods or services that are affected by economic Trends. The prices of these stocks tend to go down when the economy is in a recessionary. And go up when the economy is healthy.
cost
it takes as little as $1,000 to invest in most mutual funds
mutual fund
means by which a group of investors pool money together to invest in a diversified set of Investments.
callable bonds
most corporate and municipal bonds remain outstanding until their maturity dates. However the issuer can either repay investors or initial investment at the maturity date or choose to retire the issue early and repay investors at the call double date.
net asset value
mutual funds are measured by the value of the individual Holdings. Calculator at the end of each trading day, the end of day NAV of the mutual fund consists of combined closing values of the stocks in the fund
past performance
often it's helpful to know how a company and its stocks have performed in the past. You can study Financial charts to compare the historical performances of multiple companies and observe Trends in the data.
primary Market
part of the Capital Market that deal specifically with new Bond and stock issues
professional management
personal management is another advantage of mutual funds. Someone who has a significant amount of investment experience manages each mutual fund. These professional spend all their time researching treating and watching the Investments that make up the funds they manage.
stock broker
professional who buys and sells Securities on behalf of investors. Stockbrokers also provide advice as to which Securities to buy and sell and receive a fee for their services.
treasury inflation-protected securities (TIPS)
protect investors from inflation, as their name implies. Tips principle is adjusted to the US Consumer Price Index. When the CPI Rises, the principal address upward and vice versa. Interest is paid semi-annually.
asset allocation
refers to how you structure your portfolio with different types of assets ( stocks, bonds, mutual funds, real estate) to reduce the risk associated with these different types of Investments.
secondary Market
refers to the market in which investors purchase Securities from other investors rather than directly from an issuing company.
serial bonds
series of dates on which portions of the total bond mature, unlike traditional bonds, which are paid back to the investors all at once on one date. Serial bonds are advantages to the issuer because they reduce the overall interest expense of the bond issue
over-the-counter stocks
small Securities are traded directly between investment professionals
stock mutual funds
sometimes referred to as Equity Funds are much more popular than Bond or money market funds.
investment bankers
specialist who assist in the sale of new Securities, prepare financial documents that must be filed with the SEC. Prospectus is one of the required documents
growth stocks
stocks that are expected to generate revenue and earnings that increase at a faster rate than the average companies does the stocks pay little or no dividends.
value stocks
sucks that are viewed as being price lower than what they should be based on the earnings and financial performance of the companies that issue them
revenue bonds
supported by the income generated by the project they finance. For example, the New Jersey Turnpike Authority mate is she 1 billion and Municipal revenue bonds to finance the construction renovation of the I-95 Corridor that runs through the state. The tolls collected on that portion of I-95 would be used to pay the interest and principal of the bonds
General obligation
supported by the taxing power of the issuer, so they tend to be very safe
par (face) value
the amount of money the bondholder will get back once upon matures. Mostly newly issued bonds sell at par value.
diversification
the big advantage of investing in mutual funds is diversification. Mutual funds are for small investors at cost-effective way to invest in many different types of companies and investment products.
coupon
the bonds interest rate. It is a percentage of the par value. So, a coupon of 10% on a bond with $1,000 par value would generate $100 in interest a year.
insider trading
the buying and selling of Securities based on information that has not been disclosed to the public.
maturity date
the date on which the bond matures in the investors principal is repaid.
NYSEG euronext
the fully electronic stock exchange
compound interest
the interest you earn on your initial savings periodically gets added to the total amount you have saved and begins earning interest as well.
New York Stock Exchange
the largest and most dominant Stock Exchange
risk-return relationship
the least risky Investments offering the lowest amount of return and vice versa
defensive stocks
the opposite of a clinical stock. Defensive stocks are issued by companies that produce Staples such as food, drugs, and insurance products and usually maintain their values regardless of the state of the economy
index
tracks and measures the combined value of a large group of stocks
three variables to bonds
Face value, maturity date, and yield
Series EE savings bond
I have a 20 year maturity but will pay interest up to a total of 30 years. Interest accumulates monthly and is paid when the holder redeems the bond