Volume 1 - Key Terms Flashcards
Capital
Is synonymous with wealth, both real (land, buildings, and other material goods) and representational (money, stocks, and bonds). Represents the invested savings of individuals, corporations, governemnts, and other organizations.
What is direct Investments
- borrowers invest savings in gome
- government in new highway
- Coy start up costs for new plant
What are Indirect Investments
- Stocks or bonds
- RESP
- Savings in the bank
Political Envirnment
Is the Country Involved, or likely to be involved, in internal or external conflict.
Economic Trends
How Stong is growth in key areas such as gross domestic product, inflation rate, and economic activity.
Fiscal policy
How high are taxes and government spending, and to what degree does the government encourage savings and investment.
Monetary Policy
How sound is the nations money supply management, and to what extent does it promote price and foreign exchange stability.
Investment Opportunities
what opportunities exist for investment and how satisfactory are the returns on investment in comparison to the risk.
The Labour Force
What percentage of the labour force is skilled and productive.
Reatail Investors
Individual clients who buy and sell securities for their personal accounts.
Institional Investors
Are organizations, such as pension and mutual funds companies, that trade in large-share quantities or dollar amounts. They typically have a steady flow of money to invest.
Equity Securities
(Stocks) represent some form of ownership stake in the company that issued them. Receives a capital gain upon selling
Money Markets
Only short-term fixed-income securities with a term of one year or less trade in the money market.
Primary Markets
Newly issued securities are sold by companies and governments to investors. stocks or bonds. Newly issued are known as IPOs.
Secondary Market
Trading securities that have already been issued by companies and governemtns. Securities are transfered from sellers to buyers. Issueing company does not receive proceeds from transactions in secondary markets. receives pmt only when securities are first issued.
Auction Markets
Securities are bought and sold by investors, investment dealers, who typically act as agents, execute the buy and sell orders on behalf of their clients. Buyers enter bids and sellers enter offers. orders are chanelled to a single central market where they compete against each other. A trade is executed only when there is a match in the bid and ask prices.
Bid-ask-spread
Between trades, the best bid is lower than the best offer. the difference between prices is called the bid-ask-price
Fixed Income Securities
Treasury Bills
Bonds
Equity Securities
Common Stock
Preferred Shared
Derivatives
Product whose value is derived from the value of an underlying instrument, live stock or an index. used for more sophisticated investors. (Options, and Forwards)
Managed Products
(Also called Investment funds) are typically pools of capital gathered from investor to buy securities according to a specific investment mandate. (Mutual funds, Exchange-traded funds, Private Equity Funds)
Structured Products
Financially engineered product with the characteristics of debt, equity, and an investment fund (principal-protected notes, and Index-linked guaranteed investment certifiicates)
Bid price
is the highest price a buyer is willing to pay for the security being quoted
ask price
lowest price a seller will accept
bid-ask spread
amount that the ask price exceeds the bid price
Stock Exchange
is an auction market where buyers and sellers of securities meet to trade with each other and where prices are established accoriding to the laws of supply and demand. trading is carried out through
- preffered shares
- rights and warrants
- exchange-traded funds
- Income trusts
- convertible debentures
Dealer Markets
Can be referred to as over the counter marketr (OTC) markets. consist of a network of banks and investment dealers. unlike an auction market a dealer market is a negotiated market where market makers post bid and ask quotes via electronic platforms. In the OTC market, the investment dealers act as principals.
What is CanDeal
is a member of the investment industry regulatory Org of Canada, and it is a joint venture between Canadas big six investment dealers. Operated by TMX Group. Ltd. and is recognized as both a debt ATS and an investment dealer. Offers institutional acces to government securities and money market instruments.
What is CBID and CBID Institutional
Is an ATS that operates two distinct fixed income marketplaces:
Retail and Institutional.
Retail fixed income markets place is accessible by registered dealers on behalf of retail clients.
Institutional fixed income marketplace is accessible by registered dealers, institutional investors, governments, and pension funds.
What is MarketAxess
provides market data and a trading platform with access to multi-dealer competitive pricing for a wide range of corp bonds and other types of fixed income instruments. Member of IIROC and operates in ON, and QC
What is CanPX
joint venture between several Canadian Investment dealers and inter-dealer brokers (firms that facilitate trades between investment dealers). combines digital feeds from participating dealers to provide a composite display of real-time bid and offer quotes, in price and yield terms and with volume info. covers government of canada bonds and treasury bills.
