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13 Cards in this Set
- Front
- Back
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What is an investment?
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An investment is the current commitment of money or other resources in the expectation of reaping future benefits.
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What are real assets?
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Assets used to produce goods and services.
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What are financial assets?
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Claims on real assets or the income generated by them.
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Fixed income securities.
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Fixed income securities promise either a fixed stream of income or stream of income that is determined according to a specified forula.
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Money market.
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Fixed income securities that are short term, highly marketable, and generally very low risk.
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Fixed income capital market.
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Includes long-term securities such as Treasury bonds, as well as bonds issued by federal agencies, state and local municipalities, and corporations.
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Equity.
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An ownership share in the corporation. The performance of equity securities is tied directly to the performance of the firm.
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Derivative securities.
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Provide payoffs based on the prices of other assets such as bond or stock prices.
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Agency problem.
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Conflicts of interest between managers and stockholders.
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Investment process.
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Objective setting
Security Selection Asset allocation Performance Measurement |
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Passive management.
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Buying and holding a diversified portfolio without attempting to identify mispriced securities. This managment philosophy is based upon the idea that securities are already priced fairly with respect to their risk.
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Active managment.
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Attempting to identify mispriced securities or to forecast broad market trends.
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Financial intermediaries.
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Institutions that connect borrowers and levders by accepting fuds from lenders and loaning funds to borrowers.
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