01 - Background and Issues

  1. Investment
    Commitment of current resources in the expectation of deriving greater resources in the future.
  2. Real Assets
    Assets used to produce goods and services.
  3. Financial Assets
    Claims on real assets or the income generated by them.
  4. Fixed-income (Debt) Securities
    A financial asset that pays a specified cash flow over a specific period.
  5. Equity
    An ownership share in a corporation.
  6. Derivative Securities
    Securities providing payoffs that depend on the values of other assets.
  7. Agency Problems
    Conflicts of interest between managers and shareholders.
  8. Asset Allocation
    Allocation of an investment portfolio across broad asset classes.
  9. Security Selection
    Choice of specific securities within each asset class.
  10. Security Analysis
    Analysis of the value of securities.
  11. Financial Intermediaries
    Institutions that connect borrowers and lenders by accepting funds from lenders and loaning funds to borrowers.
  12. Investment Managers
    Firms that invest funds for individual investors.
  13. Investment Bankers
    Firms specialising in the sale of new securities to the public, typically by underwriting the issue.
  14. Certificate of Deposit (CD)
    A term deposit with a bank.
  15. Bank-accepted Bill
    A short-term debt instrument guaranteed by a bank.
  16. Commercial Paper
    Short-term unsecured debt issued by large corporations.
  17. Treasury Notes
    Short-term government securities issued at a discount from face value.
  18. Repurchase Agreements (REPOS)
    Short-term sales of high grade securities with an agreement to repurchase the securities at a higher price.
  19. London Interbank Offer Rate (LIBOR)
    Lending rate among banks in the London market.
  20. Coupon
    A fixed, periodic payment from a bond.
  21. Treasury Bonds
    Debt obligations of the Australian Government with varying original maturities.
  22. Corporate Bonds
    Long-term debt issued by private corporations typically paying semi-annual coupons and returning the face value of the bond at maturity.
  23. Default Risk
    The possibility a borrower may not pay a cash flow or flows promised to a bond-holder.
  24. Ordinary Shares
    Ownership shares in a publicly held corporation.

    Shareholders have voting rights and may receive dividends.
  25. Preferred Stock
    Shares in a corporation, usually paying a fixed stream of dividends.
  26. Derivative Asset
    An instrument with a payoff that depends on the prices of other securities.
  27. Call/Put Option
    The right to buy/sell an asset at a specified price on or before a specified expiration date.
  28. Contract For Difference (CFO)
    A derivative that can be bought or sold by small investors.
Card Set
01 - Background and Issues
221 - Background and Issues