INVESTMENTS

THE CURRENT COMMITMENT OF MONEY OR OTHER RESOURCES IN THE EXPECTATION OF REAPING FUTURE BENEFITS.

ASSETS WHETHER TANGIBLE OR NOT USED TO PRODUCE GOODS OR SERVICES

CLAIMS ON REAL ASSETS OR THE INCOME GENERATED BY THEM.

• LAND
• BUILDING
• COMPUTER
• PATENT
• COLLEGE EDUCATION

• STOCKS
• COMMON STOCK
• PREFERRED STOCK
• DEBT SECURITIES
• MONEY MARLET SECURITIES
• BONDS
• DERIVATIVE SECURITIES
• OPTIONS AND FUTURES
• LOANS
• DEPOSITS
• $10 BILL

STOCKS OR BONDS

GOOGLE OR YAHOO

START WITH ASSET ALLOCATION

START WITH SECURITY SELECTION (google or yahoo)

A COLLECTION OF SECURITIES

FINDING MISPRICED SECURITIES

EXPLICIT TIMING

• NO ATTEMPT TO FIND MISPRICEd SECURITIES
• NO EXPLICIT TIMING
• HOLDING A DIVERSIFIED PORTFOLIO

NEW ISSUES OF SECURITIES ARE OFFERED TO THE PUBLIC. (IPOS)

TRADING OF ALREADY ISSUED SECURITIES AMONG INVESTORS

NYSE, NASDAQ, BATS, DIRECT EDGE

• SHORT TERM (MATURE IN LESS THAN ONE YEAR)
• EASILY MARKETABLE (HIGHLY LIQUID)
• RELATIVELY LOW RISK

FREQUENTLY CALLED CASH EQUIVALENTS

• 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

• TIME DEPOSIT WITH A BANK
• NEGOTIABLE FOR LARGE ONES (NCD>$100,000)

• 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

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

DOLLAR DENOMINATED DEPOSITS IN FOREIGN BRANCHES OF AMERICN BANKS

ESCAPE REGULATION FROM FEDERAL RESERVE BOARD

• 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.)

FUNDS IN THE ACCOUNTS OF DEPOSITORY INSTITUTIONS AT THE FEDERAL RESERVE DISTRICT BANKS ( THE BANKS RESERVES)

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

• UP TO 10 YEARS
• 2,3,5,7, AND 10 YEARS

• 30 YEARS
• MAY BE CALLABLE

• SEMIANNUAL COUPON PAYMENTS
• DENOMINATION OF $100
• QUOTATION IN PERCENTAGE OF PAR VALUE WITH AN INCREMENT OF 1/32 OF A PERCENTAGE POINT

TO EXECUTE AT THE AVAILABLE PRICE

TO EXECUTE AT A PRICE AS OR BETTER THAN SPECIFIED

CONTINGENT ORDER

FEES PAID TO A BROKER FOR MAKING THE TRANSACTION

ASK-BID

BEST QUOTED SELLING PRICE

BEST QUOTED BUYING PRICE

• THEY PAY SEMIANNUAL BONDS
• SECURED ( BONDS WITH COLLATERAL(HIGHEST PRIORITY))

UNSECURED (NO CALLATERAL, 2ND HIGHEST PRIORITY)

SUBORDINATED DEBENTURES (NO COLL. LOWER PRIORITY THAN UNSECURED)

Y=ANNUAL COUPON INCOME/PRICE

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

FIXED DIVIDENDS

CUMULATIVE PROVISION

PRIORITY OVER COMMON STOCKS

THE RIGHT TO BUY THE UNDERLYING ASSET FOR A SPECIFIED PRICE ON OR BEFORE A SPECIFIED DATE

THE RIGHT TO SELL THE UNDERLYING ASSET FOR A SPECIFIED PRICE ON OR BEFORE A SPECIFIED DATE

OPTION BUYERS HAVE THE RIGHTS, BUT OPTION SELLERS HAVE THE OBLIGATION

AUCTION MARKETS WITH CENTRALIZED ORDER FLOWS

DEALERSHIPS- BUY AND SELL FROM AN INVENTORY

SECURITIES- STOCK, FUTURES CONTRACTS, OPYIONS, AND TO A LESSER EXTENT BONDS

NYSE, CBOE (CHICAGO BOARD OPERATIONS EXCHANGE)

INTENDE FOR INVESTORS WHO SEEK INFLATION PROTECTION

THEY COME IN 5,10 AND 30 YEAR TIPS

IT IOS ADJUSTED FOR THE US INFLATION RATE ( CPI INDEX MONTHLY)

COUPON RATES LESS THAN OTHER TREASURY BONDS

COUPON PAYMENT INCREASES WITH INFLATION

ISSUED BY STATE AND LOCAL GOVTS

• INTEREST INCOME IS EXEMPTED FROM FEDERAL INCOME TAXATION
• GENERAL OBLIGATION BONDS\
• REVENUE BONDS (RISKIER)

THE DISTRIBUTION OF LIMIT ORDERS IN DIFFERENT BID AND ASK PRICES

THE %AGE OF MONEY YOU HAVE TO PROVIDE ON YOUR OWN

SET BY THE FED

MINIMUM PROPORTION OF EQUITY ( YOUR OWN MONEY THAT YOU MUST MAINTAIN IN YOUR ACCOUNT

NOTIFICATION FROM BROKER THAT YOU MUST ADD FUNDS WHEN YOUR PROPORTION OF FUNDS FALLS BELOW THE MAINTENANCE MARGIN

TO PROFIT FROM A DECLINE IN THE PRICE OF A SECURITY.

AUTHORITY OVER SECURITY TRADING IN THE US

REGULATES TRADING IN THE FUTURES MARKET.

BROAD RESPONSIBILITY FOR THE HAELTH OF THE US FINANCIAL SYSTEM

FINANCIAL INDUSTRY REGULATORY AUTHORITY

SELF REGULATORY ENTITY OF SECURITY MARKETS

PVERSEES THE DAY TO DAY OPERATIONS OF SECURITY MARKETS WITH THE EXCHANGES (MARKET OPERATORS)

MUNICIPAL BONDS

TREASURY BONDS