Investments Unit 1 Quizalize

An asset that is directly useful for producing a good or service

Real asset

Gives the buyer the option to buy a stock at a certain price point within a specific period

Call option

Provides investors with a diversified portfolio of investments across various asset classes

Exchange-traded fund (ETF)

Where investors buy and sell securities they already own

Secondary market

Gives the buyer the option to sell a stock at a certain price point within a specific period

Put option

A security that makes no periodic payments and is sold at a deep discount from face value

Zero-coupon bond (or Treasury bill)

Where specific investments are made with the goal of outperforming an investment benchmark index or target return

Active management

Helps corporations raise capital

Investment bankers

Aims to maximize returns over the long run by keeping the amount of buying and selling to a minimum

Passive management

Weight of a distribution's tails relative to the center of the distribution

Kurtosis

A security that is reliant upon an underlying asset or group of assets

Derivative

Investment in a company, firm, or security that is not publicly traded

Private equity

A product offered by banks and credit unions that provides an interest rate premium in exchange for leaving a lump-sum investment untouched for a predetermined period

Certificate of deposit

Investments that mature between two and 10 years, with bi-annual interest payments, but relatively low yields

Treasury note

Investment that provides a return in the form of constant periodic interest payments and the eventual return of principal at maturity

Fixed income security

A conflict of interest inherent in any relationship where one party is expected to act in another's best interests

Agency problems

A bond's annual coupons divided by its current price

Current yield

Move funds from parties with excess capital to parties needing funds

Financial intermediaries

Shows the extra return an investor expects for each change in the level of risk

Capital market line

Square root of the average deviation from the mean

Standard deviation

Measure of distortion or asymmetry in a distribution

Skewness

The maximum dollar amount expected to be lost over at a pre-defined confidence level

Value at risk