Professional Documents
Culture Documents
KHURAM IMS
KHURAM IMS
Direct Investing
The money market securities includes treasury bills, commercial papers etc The capital market securities can be classifies either fixed-income or equity fixedsecurities. securities. Finally, investors may choose to use derivative securities in their portfolios. portfolios.
KHURAM IMS
Money Market
Treasury bills Negotiable certificates of deposits Commercial paper Eurodollars Repurchase agreement Banker s acceptance
KHURAM IMS
Derivatives Market
Options Future Contracts
KHURAM IMS
KHURAM IMS
KHURAM IMS
FixedFixed-Income Securities
Capital Market: The market for long-term securities Market: longsuch as bonds and stocks. stocks. Capital market encompass fixed-income and equity fixedsecurities with maturities greater than one year. year. Risk is generally much higher than in the money market because of the time to maturity and the very nature of the securities sold in the capital markets. markets. The capital market includes both debt and equity securities, with equity securities having no maturity date. date.
KHURAM IMS
FixedFixed-Income Securities
FixedFixed-income securities: These are the securities: securities with specified payment date and amounts primarily bonds. bonds. Bonds are long-term debt instruments longrepresenting the issuer s contractual obligation or IOU. IOU.
KHURAM IMS
Equity Securities
Preferred Stock: An equity security with Stock: an intermediate claim (between the bondholder and the stockholder) on a firm s assets and earnings. earnings. Common Stock: An equity security Stock: representing the ownership interest in a corporation. corporation.
KHURAM IMS
Derivative Securities
Derivative securities: are the securities securities: that derive their value in whole or in part by having a claim on some underlying security. security. A financial security such as an option or future whose value is derived in part from the value and characteristics of another security, the underlying asset. asset.
KHURAM IMS
Derivative Securities
Future Contract: Futures involve a Contract: financial contract that requires the buyer to purchase an asset (or the seller to sell an asset), such as a physical commodity or a financial instrument, at a specific price on a predetermined date in the future. future.
KHURAM IMS
Derivative Securities
Option: Option: A contract in which the writer (seller) promises that the contract buyer has the right, but not the obligation, to buy or sell a certain security at a certain price (the strike price) on or before a certain expiration date, or exercise date. The asset in the contract is referred to as the underlying asset, or simply the underlying. An option giving the buyer the right to buy at a certain price is called a call, while one that gives him/her the right to sell is called a put.
KHURAM IMS
Derivative Securities
The primary difference between options and futures is that options give the holder the right, not the obligation, to buy or sell the underlying asset until expiration, whereas the holder of a futures contract is obligated to fulfill the terms of the contract. contract.
KHURAM IMS
Indirect Investing
Indirect Investing refers to the buying and selling of the shares of investment companies, which, in turn, hold portfolios of securities. securities. Indirect investing is a very important alternative for all investors to consider, and has become tremendously popular in the last few years with individual investors. investors.
KHURAM IMS
KHURAM IMS