Exam 1 Review
Chapter 2
- asset types - money markets, bonds, and stocks/ equities
- liquidity
- time-frame
- risk
- money markets
- - short term, low risk, highly liquid, cash and cash equivalents, low return
- stocks - ownership in the company
- bonds - debt or loans to the company
- in event of bankruptcy - bondholders get paid first - loans from the public to the company
- risk reward game based on types of assets
- stocks are most risky
- money markets are safest
- stocks vs. bonds
- which of the reasons is why bonds are less risky
- returns are more predictable
- priority in default
- obligation to pay out coupon payments
- more predictable
- indexes
- type
- differentiates the type of weighted
- price weighted
- higher priced companies - more money into higher priced firms
- market weighted
- bigger companies - more money into bigger companies
- market cap
- equally weighted
- same money invested in each class
- differences
- derivatives
- derived from other assets
- options
- coke - based on things that happen within the company
Chapter 3
- types of orders - how/ when would you use each of them
- bid
- buy
- ask
- sell
- market order
- current price
- limit
- stop limit
- limit order - buys
- trading costs
- traditional vs emotional
- tech advancements
- algorithm trading
- high frequency trading
- globalization
- investing internationally
- tech advancement
- people have more access to the market
- more unknowledgable people trading in the stock market that make the market noisy
- \
Chapter 4
- types of funds
- etfs
- trade throughout day - at any time
- mutual funds
- only trades at the end of the day
- reits
- funds allocation
- assets
- bonds
- International
- sectors
- targeted
- advantages of using an investment company
- record keeping
- diversification
- reduces transaction costs
- professional management
- advice
- active vs passive
- fees
Chapter 6
market efficiency
- price inconsistently
- bahaviora