Invest. Analys. L2 Flashcards
The investment environment,assets classes, financial instruments and how securities are traded
Investment
An investment is the current commitment of money or other resources in the expectation of reaping future benefits
Real assets
Goods and services, such as land, buildings, machines and knowledge
Financial assets
Means to hold claims on real assets, usually no more than sheets of paper or computer entires
Real assets generate….
net income to the economy
Net income
the amount of money a company has left over all its expenses, taxes and costs have been deducted from total revenue
Net loss
net loss occurs when a companys total exceeds its total revenue, resulting in a negative financial statement
Financial assets define
the allocation of income or wealth among investors
three broad types of financial assets
fixed income, equity and derivaties
Fixed income promise:
either a fixed income stream or a stream of income determined by a specific formula, such as corporate bond
Bonds
corporate or government bonds promise the bondholder a fixed amount of interest each year
Floating-rate bonds
promise the bondholder an inerest that is dependent on current interest rates
properties
unless the borrower is declared bankrupt, interest is either fixed or determined by a formula
Dividends
payments made by a corporation to its shareholders
equity
represent an ownership of a firm, does not promise any particular payment,
properties in relation to equity
preformence tied directly to the firms performance and its real assets
