Part 3 Flashcards
ADR
facilitate the trading of foreign securities in the US securities market
technical analysis
analyst charts of a stock market price and volume over a period of time
Trends, support & resistance, moving averages
Fundamental analysis
looks at the companys financial statement
Discounted cash flow
commonly used to value debt securities
Bond’s price will always reflect a yield equal to current market interest rates for comparable risk
investments company act of 1940
face-amount certificate, unit investment trust, a management company
12b-1 fees
marketing and promotion of annual expense
max of .75%
ETF’s
traded on exchanges or Nasdaq
bought on margin and sold short
REIT’s
mortgage trust, not flow through
90% of income distributed
Forward contracts
two-party contracts, nonliquid, nonstandardized,
term negotiated: Quantity, quality, time, place, price
Futures Contracts
exchange regulated
Quantity, quality, time, place, price
Long buyer
obligated to take delivery
Short Seller
Obligated to make delivery
Cost of using options
commissions to buy and sell
benefits of using long options
leverage increases return percentage
less capital at risk
long put has less risk than short stock sale
Insurance - hedging
Benefits of using short options
income from the premium
partial hedge
Call hedge long stock positions to extent of premium
Put hedge short stock positions to extent of premium
Long options
option could expire
short options
profits limited to premium received
uncovered call has unlimited risk
Benefits of forwards/ futures
limit future price risk & lock in profits or expense
risks of forwards/futures
counterparty risk
lack of liquidity
daily margin
guess wrong
DPP Partners
General partner, limited partner,
General Partner
GP management role & unlimited liability
Limited Partner
no management role & limited liability
ETN’s
debt instruments, market index or benchmark
Commodities
Corn, pork bellies, crude oil, copper, gold
Commodities benefits
potential hedge against inflation, diversification, profit potential
risk of commodities
loss of principal, volatility, high spread, lack of income
