Chapter 1 terms Flashcards
Securities
stocks, bonds, options
Tangible personal property
gold, artwork, antiques, collectables
Direct investment
directly owns a claim on a security or property
Indirect investment
owns an interest in a professionally managed collection of securities or properties
Derivative securities
Derive values from an underlying asset (share of a stock or a commodity)
short term investment
matures within one year
long term investment
maturities of longer than a year
Why do individual investors invest?
invest for personal financial goals (retirement, house)
Why do institutional investors invest?
Paid to manage other people’s money
Qualities of short term investments
1 year or less, high liquidity
What is a common stock?
ownership share of a corporation, return comes through dividends and capital gains
What are fixed income securities
bonds, convertible securities, preferred stock
What are mutual funds?
Pool money from investors to buy a diversified portfolio, managed by pros. Priced once daily.
What are exchange-traded funds (ETFs)?
Like mutual funds, except you can buy and sell on the stock exchange.
What are hedge funds?
Funds that pool resources from different investors, but usually have high entry requirements and fewer regulations.
