经济学金融技术分析培训课件

WhatisanInvestment“AnInvestmentisthecurrentcommitmentofmoneyorotherresourcesintheexpectationofreapingfuturebenefits”WhatisanInvestment“AnInves1RealAssetsVersusFinancialAssetsRealAssetsAssetsusedtoproducegoodsandservices(land,buildings,machine,knowledgeorpatentsetc.)FinancialAssetsClaimsonrealassets(Stocks,Bondsetc.) ThesuccessandfailureoffinancialassetswechoosetopurchaseultimatelydependontheperformanceoftheunderlyingrealassetsRealAssetsVersusFinancialA2TypesFinancialAssetsFixedincomeordebtMoneymarketinstrumentsBankcertificatesofdepositCapitalmarketinstrumentsBondsCommonstockorequityDerivativesecuritiesTypesFinancialAssetsFixedi3Allocationvs.SelectionAssetallocationChoiceamongbroadassetclassesChoiceofsectorwithinaparticularassetclassSecurityselectionChoiceofwhichsecuritiestoholdwithinassetclassAllocationvs.SelectionAsset4Activevs.PassiveManagementActiveManagementFindingmispricedsecuritiesTimingthemarketPassiveManagementNoattempttofindundervaluedsecuritiesNoattempttotimethemarketHoldingahighlydiversifiedportfolioActivevs.PassiveManagementA5RiskandReturnTrade-off“No-FreeLunchProposition”RiskandReturnTrade-off“No-F6Primaryvs.SecondaryMarketNewissuesofsecuritiesareofferedtothepublicintheprimarymarket.IPOs–InitialPublicOfferingsPreviouslyissuedsecuritiesarethentradedinthesecondarymarketPrimaryvs.SecondaryMarketNe7MarketTrendsAmericanDepositoryReceipts(ADRs)ForeignsecuritiesofferedindollarsMutualfundsthatinvestinternationallyInstrumentsandvehiclescontinuetodevelop(WEBs)ExchangeTradedFunds(ETFs)MarketTrendsAmericanDeposito8RecentTrends—SecuritizationMortgagepass-throughsecuritiesOtherpass-througharrangementsCar,student,homeequity,creditcardloansOffersopportunitiesforinvestorsandoriginatorsRecentTrends—SecuritizationM9RecentTrends—FinancialEngineeringUseofmathematicalmodelsandcomputer-basedtradingtechnologytosynthesizenewfinancialproductsBundlingandunbundlingofcashflowsRecentTrends—FinancialEngine10RecentTrends—ComputerNetworksOnlineinformationdisseminationInformationismadecheaplyandwidelyavailabletothepublicAutomatedtradecrossingDirecttradingamonginvestorsRecentTrends—ComputerNetwork11FedFunds–bankdepositsattheFederalReservebankEvidencethatperformanceisconsistentfromoneperiodtothenextissuggestivebutinconclusiveRegulationSecuritiesMarketsContinuedShelfRegistrationsReducedtransactioncostsMutualfundsthatinvestinternationallyInvestmentBankingMunicipalBonds-IissuedandlocalgovernmentsTreasuryNotesandBonds-IssuedbytheU.AutomatedtradecrossingSpread:costoftradingwithdealerSecuritiesActof19342EquivalentTaxableYieldsCorrespondingtoVariousTax-ExemptYieldsT-Billsarethemostmarketableofallmoneymarketinstruments.PassiveManagementUsingonlyaportionoftheproceedsforaninvestmentIssuingfirmdoesn’treceiveproceedsandisnotdirectlyinvolvedBanker’sacceptanceareanordertoabankbyabank’scustomertopayinafuturedatetypically6months.InsidersdoexploittheirknowledgePurpose:toprofitfromadeclineinthepriceofastockorsecurityTEDSpreadThespreadbetweenLIBORrate(BankborrowingRate)andT-Bill(U.S.Gov’tborrowingRate)isameasureofcreditriskinthemarketplace.FedFunds–bankdepositsatt12TheFinancialCrisisWorldfinancialmarketshavesufferedverylarge,across-theboarddeclinesinvalue.UnprecedenteddeclinesinresidentialpropertyvalueshavebeenexperiencedinmanycountriesThebankingsystemsofmostWesterncountrieshavebeenincompletedisarray,requiringhugegovernmentinterventionsAglobalrecessionisongoing,withlargenegativeeffectsimpactingemployment,tradeandgovernmentrevenuesPreviouslyactivemarketsinsecuritizeddebt,andrelatedcreditrisktransferinstruments,havegroundtoahaltTheFinancialCrisisWorldfin13CHAPTER2AssetClassesandFinancialInvestmentsCHAPTER2AssetClassesandFin14TwoSegmentsofFinancialMarketsMoneymarket–Short-term,marketable,liquid,low-riskdebtsecurities.(cashorcashequivalents)Capitalmarket–Longer-termriskiersecuritiesTwoSegmentsofFinancialMark15I)TheMoneyMarketInstrumentsU.S.T-Billsarethemostmarketableofallmoneymarketinstruments.InvestorsbuythebillsatadiscountfromstatedmaturityrateACertificateofdepositCDisatimedepositatabankCommercialPaperareshort-termunsecureddebtnoteissuesbylargecompanies.Banker’sacceptanceareanordertoabankbyabank’scustomertopayinafuturedatetypically6months.Repos–repurchaseagreements,usuallyovernightborrowingFedFunds–bankdepositsattheFederalReservebankI)TheMoneyMarketInstrument16TheMoneyMarketInstrumentsEurodollardepositsaredollar-denominateddepositsatforeignbanksorforeignbranchesofAmericanbanks.Broker’scallaretheratepaidonmarginaccountsLIBOR–RateatwhichthebankslendamongthemselvesTheMoneyMarketInstrumentsEu17Figure2.2TheSpreadbetween3-monthCDandTreasuryBillRatesFigure2.2TheSpreadbetween18IICapitalMarketLong-termBondiscomposedoflongertermborrowingordebtinstrumentsthanthosethattradeinthemoneymarketEquitySecuritiesrepresentownershipsharesinacorporation(CommonStocks)MarketIndicesvariouscompositesofbondsandstocksDerivativesinstrumentsprovidepayoffsthatdependonthevaluesofotherassetssuchascommodityprices,bondandstockprices,ormarketindexvalue.TheirvaluesderivefromthevalueofotherassetsIICapitalMarketLong-termBon191)TheLong-termBondMarketTreasuryNotesandBonds-IssuedbytheU.S.GovernmentInflation-ProtectedTreasuryBondsTIPS–provideaconstantstreamofincomeinreal(inflationadjusted)dollarsFederalAgencyDebt–IssuedbygovernmentagenciesInternationalBonds-bondsdenominatedincurrencyotherthanthatofthecountrywhichitisissuedMunicipalBonds-IissuedandlocalgovernmentsCorporateBonds–IssuedbycorporationMortgagesandMortgage-BackedSecurities-ownershipclaiminapoolofmortgagesorobligations.1)TheLong-termBondMarketTr20TreasuryNotesandBondsMaturitiesNotes–maturitiesupto10yearsBonds–maturitiesinexcessof10years30-yearbondParValue-$1,000Quotes–percentageofparTreasuryNotesandBondsMaturi21U.S.TreasurySnapshotU.S.TreasurySnapshot22Direct-marketedfundsNotactiveforstockofferingsPotentialadvantages2EquivalentTaxableYieldsCorrespondingtoVariousTax-ExemptYieldsTradingScandalwithMutualFundsBundlingandunbundlingofcashflowsShelfRegistrationsNasdaqSmallCapMarketHedgeFundsFTSE(FinancialTimesofLondon)RevenuesharingonsalesforcedistributedUsedasabasisforvaluationofinvestmentcompanyshares=-.Level2–receivesallquotesbuttheycan’tenterquotes6MarketCapitalizationofMajorWorldStockExchanges,2008AutomatedtradecrossingProportionalownershipofapooloraspecifiedobligationsecuredbyapoolPrivatecomputernetworksthatdirectlylinkbuyerswithsellersPrice-contingentBundlingandunbundlingofcashflowsFederalAgencyDebtMajorissuersFederalHomeLoanBankFederalNationalMortgageAssociationGovernmentNationalMortgageAssociationFederalHomeLoanMortgageCorporationDirect-marketedfundsFederalA23MunicipalBondsIssuedbystateandlocalgovernmentsTypesGeneralobligationbondsRevenuebondsIndustrialrevenuebondsMaturities–rangeupto30yearsMunicipalBondsIssuedbystate24MunicipalBondYieldsInterestincomeonmunicipalbondsisnotsubjecttofederalandsometimesnottostateandlocaltaxTocompareyieldsontaxablesecuritiesaTaxableEquivalentYieldisconstructedMunicipalBondYieldsInterest25Table2.2EquivalentTaxableYieldsCorrespondingtoVariousTax-ExemptYieldsTaxExemptYield=TaxableYield*(1–TaxRate)Table2.2EquivalentTaxableY26InternationalBondsAEurobondisabonddenominatedinacurrencyotherthanthatofthecountryinwhichitisissue.AdollardenominatedbondsoldinUKwouldbecallaEurodollarbond.(NorelationtoEurocurrency).AYankeebondisdollardenominatedbondsoldintheU.S.byanonU.S.issuer.ASamuraibondareyendenominatedbondsoldinJapanbynonJapaneseissuers.InternationalBondsAEurobond27CorporateBondsIssuedbyprivatefirmsSemi-annualinterestpaymentsSubjecttolargerdefaultriskthangovernmentsecuritiesOptionsincorporatebondsCallableConvertibleCorporateBondsIssuedbypriva28Developedinthe1970stohelpliquidityoffinancialinstitutionsProportionalownershipofapooloraspecifiedobligationsecuredbyapoolMarkethasexperiencedveryhighratesofgrowthMortgagesandMortgage-BackedSecuritiesDevelopedinthe1970stohelp29CommonstockResidualclaimLimitedliabilityPreferredstockFixeddividends-limitedPriorityovercommonTaxtreatmentDepositoryreceipts2)EquitySecuritiesCommonstock2)EquitySecuriti30ThereareseveralbroadlybasedindexescomputedandpublisheddailyThereareseveralindexesofbondmarketperformance3)MarketIndexesThereareseveralbroadlybase31DowJonesIndustrialAverageIncludes30largeblue-chipcorporationsComputedsince1896Price-weightedaverageDowJonesIndustrialAverageIn32Example2.2Price-WeightedAveragePortfolio:Initialvalue$25+$100=$125 Finalvalue$30+$90=$120Percentagechangeinportfoliovalue=5/125=-.04=-4%Index:Initialindexvalue(25+100)/2=62.5 Finalindexvalue(30+90)/2=60 Percentagechangeinindex-2.5/62.5=-.04=-4%Example2.2Price-WeightedAve33Broadlybasedindexof500firmsMarket-value-weightedindexIndexfundsExchangeTradedFunds(ETFs)Standard&Poor’sIndexesBroadlybasedindexof500fir34OtherU.S.Market-ValueIndexesNASDAQCompositeNYSECompositeWilshire5000OtherU.S.Market-ValueIndexe35ForeignandInt’lStockMarketIndexesNikkei(Japan)FTSE(FinancialTimesofLondon)Dax(Germany)MSCI(MorganStanleyCapitalInternational)HangSeng(HongKong)TSX(Canada)ForeignandInt’lStockMarket36TSX(Canada)TimingthemarketRevenuesharingonsalesforcedistributedETForIndexFundOpenInterestisthetotalnumberofoptionscontractsthatarenotclosedordeliveredonaparticularday.InterestincomeonmunicipalbondsisnotsubjecttofederalandsometimesnottostateandlocaltaxNotactiveforstockofferingsMajorissuersHowSecuritiesareTradedBondTradingTypesofInvestmentCompaniesRevenuesharingonsalesforcedistributedMunicipalBondYieldsBonds–maturitiesinexcessof10yearsLowercostsShelfRegistrationsForeignsecuritiesofferedindollarsBuyingonMarginTradecontinuouslyAdollardenominatedbondsoldinUKwouldbecallaEurodollarbond.ForeignandInt’lStockMarketIndexesTSX(Canada)ForeignandInt’l37GlobalEquityMarketSnapshotGlobalEquityMarketSnapshot384)DerivativesMarketsOptionsBasicPositionsCall(Buy)Put(Sell)TermsExercisePriceExpirationDateAssetsFuturesBasicPositionsLong(Buy)Short(Sell)TermsDeliveryDateAssets4)DerivativesMarketsOptionsF39Figure2.10TradingDataonIntelOptionsOpenInterestisthetotalnumberofoptionscontractsthatarenotclosedordeliveredonaparticularday.

Figure2.10TradingDataonIn40Figure2.10ListingofCornFuturesContractsFigure2.10ListingofCornFu41CHAPTER3HowSecuritiesareTradedCHAPTER3HowSecuritiesareTr42HowFirmsIssueSecuritiesPrimaryNewissueKeyfactor:issuerreceivestheproceedsfromthesaleSecondaryExistingownersellstoanotherpartyIssuingfirmdoesn’treceiveproceedsandisnotdirectlyinvolvedHowFirmsIssueSecuritiesPrim43HowFirmsIssueSecuritiesContinuedInvestmentBankingShelfRegistrationPrivatePlacementsInitialPublicOfferings(IPOs)HowFirmsIssueSecuritiesCon44

InvestmentBanking

Underwritten:firmcommitmentonproceedstotheissuingfirmRedherringProspectus

InvestmentBanking

Underwritt45Figure3.1RelationshipAmongaFirmIssuingSecurities,theUnderwritersandthePublicFigure3.1RelationshipAmong46InternationalOtherinvestmentorganizationsMutualFunds—InvestmentPolicies(NorelationtoEurocurrency).NoattempttofindundervaluedsecuritiesMunicipalBonds-IissuedandlocalgovernmentsPotentialadvantagesRepos–repurchaseagreements,usuallyovernightborrowingThespreadbetweenLIBORrate(BankborrowingRate)andT-Bill(U.Examples-SPDRsandWEBSBondTradingHowSecuritiesareTradedShortSalesUnderpricingFixeddividends-limitedShelfRegistrationsFinancialexpertstoserveonauditcommitteesofboardsofdirectorsHedgeFundsGovernmentBankcertificatesofdepositCorporateBondsAdollardenominatedbondsoldinUKwouldbecallaEurodollarbond.ShelfRegistrationsSECRule415Introducedin1982Readytobeissued–ontheshelfInternationalShelfRegistratio47SaletoalimitednumberofsophisticatedinvestorsnotrequiringtheprotectionofregistrationAllowedunderRule144ADominatedbyinstitutionsVeryactivemarketfordebtsecuritiesNotactiveforstockofferingsPrivatePlacementsSaletoalimitednumberofso48InitialPublicOfferingsProcessRoadshowsBookbuildingUnderpricingPostsalereturnsCosttotheissuingfirmInitialPublicOfferingsProces49Figure3.2AverageInitialReturnofIPOsFigure3.2AverageInitialRet50Figure3.3Long-termRelativePerformanceofInitialPublicOfferingsFigure3.3Long-termRelative51HowSecuritiesareTradedTypesofMarketsDirectsearchLeastorganizedBrokeredTradinginagoodisactiveDealerTradinginaparticulartypeofassetincreasesAuctionMostintegratedHowSecuritiesareTradedTypes52TypesofOrdersMarket—executedimmediatelyBidPriceAskPricePrice-contingentInvestorsspecifypricesStopordersTypesofOrdersMarket—executed53Figure3.5Price-ContingentOrdersFigure3.5Price-ContingentOr54TradingMechanismsDealermarketsElectroniccommunicationnetworks(ECNs)SpecialistsmarketsTradingMechanismsDealermarke55U.S.SecurityMarketsNasdaqandNYSEhaveevolvedinresponsetonewinformationtechnologyBothhaveincreasedtheircommitmenttoautomatedelectronictradingU.S.SecurityMarketsNasdaqan56NetAssetValueMutualfundsthatinvestinternationallyPotentialdisadvantagesMoneymarketinstrumentsSelf-RegulationThespreadbetweenLIBORrate(BankborrowingRate)andT-Bill(U.Eurodollardepositsaredollar-denominateddepositsatforeignbanksorforeignbranchesofAmericanbanks.FinancialexpertstoserveonauditcommitteesofboardsofdirectorsDirectsearchIndexfundsBid:pricedealerwillbuyfromyouFinalindexvalue(30+90)/2=6010ListingofCornFuturesContractsInterestincomeonmunicipalbondsisnotsubjecttofederalandsometimesnottostateandlocaltaxTaxtreatmentBonds–maturitiesinexcessof10yearsTypesofOrdersTradingScandalwithMutualFundsPass-throughstatusundertheU.CorporateBonds–IssuedbycorporationInformationonMutualFundsAssetsusedtoproducegoodsandservices(land,buildings,machine,knowledgeorpatentsetc.NasdaqNationalMarketSystemNasdaqSmallCapMarketLevelsofsubscribersLevel1–insidequotesLevel2–receivesallquotesbuttheycan’tenterquotesLevel3–dealersmakingmarketsNetAssetValueNasdaqNational57Table3.1PartialRequirementsforListingonNASDAQMarketsTable3.1PartialRequirements58NewYorkStockExchangeMemberfunctionsCommissionbrokersFloorbrokersSpecialistsBlockhousesNewYorkStockExchangeMember59Table3.2SomeInitialListingRequirementsfortheNYSETable3.2SomeInitialListing60Table3.3BlockTransactionsonthe

NewYorkStockExchangeTable3.3BlockTransactionso61OtherSystemsElectronicCommunicationNetworksPrivatecomputernetworksthatdirectlylinkbuyerswithsellersNationalMarketSystemSecuritiesActofAmendmentsof1975BondTradingAutomatedBondSystem(ABS)OtherSystemsElectronicCommun62MarketStructureinOtherCountriesLondon-predominatelyelectronictradingEuronext–marketformedbycombinationoftheParis,AmsterdamandBrusselsexchangesTokyoStockExchangeGlobalizationandconsolidationofstockmarketsMarketStructureinOtherCoun63Figure3.6MarketCapitalizationofMajorWorldStockExchanges,2008Figure3.6MarketCapitalizati64TradingCostsCommission:feepaidtobrokerformakingthetransactionSpread:costoftradingwithdealerBid:pricedealerwillbuyfromyouAsk:pricedealerwillselltoyouSpread:ask-bidCombination:onsometradesbotharepaidTradingCostsCommission:feep65BuyingonMarginUsingonlyaportionoftheproceedsforaninvestmentBorrowremainingcomponentMarginarrangementsdifferforstocksandfuturesBuyingonMarginUsingonlyap66StockMarginTradingMarginiscurrently50%;youcanborrowupto50%ofthestockvalueSetbytheFedMaintenancemargin:minimumamountequityintradingcanbebeforeadditionalfundsmustbeputintotheaccountMargincall:notificationfrombrokerthatyoumustputupadditionalfundsStockMarginTradingMarginis67MarginExampleMarginExample68MarginExampleMarginExample69Spread:costoftradingwithdealerRegulatoryResponsestoRecentScandalsBlockhousesLimitedliability1PartialRequirementsforListingonNASDAQMarketsFinancialexpertstoserveonauditcommitteesofboardsofdirectorsETFallowinvestorstotradeindexportfolioslikesharesofstockIPOs–InitialPublicOfferingsShort(Sell)Eurodollardepositsaredollar-denominateddepositsatforeignbanksorforeignbranchesofAmericanbanks.MarketTrendsPotentialconflictsofinterestElectroniccommunicationnetworks(ECNs)PreviouslyissuedsecuritiesarethentradedinthesecondarymarketComputedsince1896FindingmispricedsecuritiesSecuritiesInvestorProtectionActof1970RedherringTheFinancialCrisisTheirvaluesderivefromthevalueofotherassetsMarginTrading-MarginCallExample3.2Spread:costoftradingwithd70Table3.4IllustrationofBuyingStock

onMarginTable3.4IllustrationofBuyi71ShortSalesPurpose:toprofitfromadeclineinthepriceofastockorsecurityMechanicsBorrowstockthroughadealerSellitanddepositproceedsandmargininanaccountClosingouttheposition:buythestockandreturntothepartyfromwhichiswasborrowedShortSalesPurpose:toprofit72ShortSale–ExampleShortSale–Example73ShortSale-MaintenanceMarginShortSale-MaintenanceMargi74ShortSale-MarginCallShortSale-MarginCall75RegulationofSecuritiesMarketsMajorregulationsSecuritiesActof1933SecuritiesActof1934SecuritiesInvestorProtectionActof1970Self-RegulationStockmarketsarelargelyself-regulatingRegulationofSecuritiesMarke76RegulationSecuritiesMarketsContinuedRegulatoryResponsestoRecentScandalsPublicCompanyAccountingOversightBoardFinancialexpertstoserveonauditcommitteesofboardsofdirectorsCEOsandCFOspersonallycertifyfirms’financialreportsBoardsmusthaveindependentdirectorsSarbanes-OxleyActRegulationSecuritiesMarkets77InsiderTradingOfficers,directors,majorstockholdersmustreportalltransactionsinfirm’sstockInsidersdoexploittheirknowledgeLeakageofusefulinformationtosometradersInsiderTradingOfficers,direc78CHAPTER4MutualFundsandOtherInvestmentCompaniesCHAPTER4MutualFundsandOthe79InvestmentCompaniesThesecompaniesperformseveralimportantfunctionsforinvestors:Administration&recordkeepingDiversification&divisibilityProfessionalmanagementReducedtransactioncostsInvestmentCompaniesThesecomp80NetAssetValueUsedasabasisforvaluationofinvestmentcompanysharesSellingnewsharesRedeemingexistingsharesCalculation MarketValueofAssets-Liabilities SharesOutstandingNetAssetValueUsedasabasis81TypesofInvestmentCompaniesUnitTrustsManagedInvestmentCompaniesOpen-EndOpen-end:sharesoutstandingchangewhennewsharesaresoldoroldsharesareredeemedPricedatNetAssetValue(NAV)Closed-EndnochangeinsharesoutstandingunlessnewstockisofferedPricedatPremiumordiscounttoNAVTypesofInvestmentCompaniesU82TypesofInvestmentCompaniesOtherinvestmentorganizationsCommingledfundsREITsHedgeFundsTypesofInvestmentCompaniesO83MutualFunds—InvestmentPoliciesMoneyMarketEquitySectorBondBalancedAssetAllocationandFlexibleIndexInternationalMutualFunds—InvestmentPolici84HowFundsAreSoldDirect-marketedfundsSalesforcedistributedRevenuesharingonsalesforcedistributedPotentialconflictsofinterestFinancialSupermarketsHowFundsAreSoldDirect-marke85CostsofInvestinginMutualFundsFeeStructureOperatingexpensesFront-endloadBack-endload12b-1chargesdistributioncostspaidbythefundAlternativetoaloadCostsofInvestinginMutualF86

FeesandMutualFundReturns

FeesandMutualFundReturns

87FeesandMutualFundReturns:

AnExampleInitialNAV=$20Incomedistributionsof$.15Capitalgaindistributionsof$.05EndingNAV=$20.10:FeesandMutualFundReturns:

88Table4.2ImpactsofCostsonInvestmentPerformanceTable4.2ImpactsofCostson89NasdaqSmallCapMarketForeignsecuritiesofferedindollarsDirect-marketedfundsMunicipalBondsFairvaluepricingwithnetassetvaluesbeingadjustedfortradinginopenmarketsFinancialexpertstoserveonauditcommitteesofboardsofdirectorsdistributioncostspaidbythefundBonds–maturitiesinexcessof10yearsMortgagepass-throughsecuritiesElectroniccommunicationnetworks(ECNs)Optionsincorporatebonds1PartialRequirementsforListingonNASDAQMarketsMoneymarketinstrumentsFeeStructureUnitTrustsMunicipalBondsSecuritiesActof1933BondTradingTwoSegmentsofFinancialMarketsTradingScandalwithMutualFundsLatetrading–allowingsomeinvestorstopurchaseorselllaterthanotherinvestorsMarkettiming–allowinginvestorstobuyorsellonstalenetassetvaluesInternationalNeteffectistotransfervaluefromothershareholderstoprivilegedtradersReductionintherateofreturnofthemutualfundNasdaqSmallCapMarketTrading90PotentialReformsStrict4:00PMcutoffwithlateordersexecutedthefollowingtradingdayFairvaluepricingwithnetassetvaluesbeingadjustedfortradinginopenmarketsImpositionofredemptionfeesPotentialReformsStrict4:00P91TaxationonMutualFundIncomePass-throughstatusundertheU.S.taxcodeTaxesarepaidonlybytheinvestorHighturnoverleadstotaxinefficiencyTaxationonMutualFundIncome92ExchangeTradedFundsETFallowinvestorstotradeindexportfolioslikesharesofstockExamples-SPDRsandWEBSPotentialadvantagesLowertaxesTradecontinuouslyLowercostsPotentialdisadvantagesPricescandepartbysmallamountsfromNAVExchangeTradedFundsETFallow93Figure4.2ETFGrowthinU.S.Figure4.2ETFGrowthinU.S.94Indexvs.ETForIndexFundIndexvs.ETForIndexFund95Table4.3EFTSponsorsandProductsTable4.3EFTSponsorsandPro96MutualFundInvestmentPerformance:

AFirstLookEvidenceshowsthataveragemutualfundperformanceisgenerallylessthanbroadmarketperformanceEvidencethatperformanceisconsistentfromoneperiodtothenextissuggestivebutinconclusiveMutualFundInvestmentPerform97InformationonMutualFundsMorningstar()Yahoo()InvestmentCompanyInstitute()DirectoryofMutualFundsInformationonMutualFundsMor98I)TheMoneyMarketInstrumentsU.S.T-Billsarethemostmarketableofallmoneymarketinstruments.InvestorsbuythebillsatadiscountfromstatedmaturityrateACertificateofdepositCDisatimedepositatabankCommercialPaperareshort-termunsecureddebtnoteissuesbylargecompanies.Banker’sacceptanceareanordertoabankbyabank’scustomertopayinafuturedatetypically6months.Repos–repurchaseagreements,usuallyovernightborrowingFedFunds–bankdepositsattheFederalReservebankI)TheMoneyMarketInstrument99FederalAgencyDebtMajorissuersFederalHomeLoanBankFederalNationalMortgageAssociationGovernmentNationalMortgageAssociationFederalHomeLoanMortgageCorporationFederalAgencyDebtMajorissue100InternationalBondsAEurobondisabonddenominatedinacurrencyotherthanthatofthecountryinwhichitisissue.AdollardenominatedbondsoldinUKwouldbecallaEurodollarbond.(NorelationtoEurocurrency).AYankeebondisdollardenominatedbondsoldintheU.S.byanonU.S.issuer.ASamuraibondareyendenominatedbondsoldinJapanbynonJapaneseissuers.InternationalBondsAEurobond101CHAPTER3HowSecuritiesareTradedCHAPTER3HowSecuritiesareTr102HowFirmsIssueSecuritiesPrimaryNewissueKeyfactor:issuerreceivestheproceedsfromthesaleSecondaryExistingownersellstoanotherpartyIssuingfirmdoesn’treceiveproceedsandisnotdirectlyinvolvedHowFirmsIssueSecuritiesPrim103MarginExampleMarginExample104ShortSale-MarginCallShortSale-MarginCall105InsiderTradingOfficers,directors,majorstockholdersmustreportalltransactionsinfirm’sstockInsidersdoexploittheirknowledgeLeakageofusefulinformationtosometradersInsiderTradingOfficers,direc106WhatisanInvestment“AnInvestmentisthecurrentcommitmentofmoneyorotherresourcesintheexpectationofreapingfuturebenefits”WhatisanInvestment“AnInves107RealAssetsVersusFinancialAssetsRealAssetsAssetsusedtoproducegoodsandservices(land,buildings,machine,knowledgeorpatentsetc.)FinancialAssetsClaimsonrealassets(Stocks,Bondsetc.) ThesuccessandfailureoffinancialassetswechoosetopurchaseultimatelydependontheperformanceoftheunderlyingrealassetsRealAssetsVersusFinancialA108TypesFinancialAssetsFixedincomeordebtMoneymarketinstrumentsBankcertificatesofdepositCapitalmarketinstrumentsBondsCommonstockorequityDerivativesecuritiesTypesFinancialAssetsFixedi109Allocationvs.Selec