9 01 summarize the various types of short term and long term investments
Download
1 / 52

9.01 Summarize the various types of short-term and long-term investments. - PowerPoint PPT Presentation


  • 199 Views
  • Uploaded on

T009-01.01. Savings and Investments. 9.01 Summarize the various types of short-term and long-term investments. H3. T009-01.02. Investing. Putting your money to use in order to make money on it. Simple Interest vs. Compound Interest

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about '9.01 Summarize the various types of short-term and long-term investments.' - jaden


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
9 01 summarize the various types of short term and long term investments l.jpg

T009-01.01

Savings and Investments

9.01

Summarize the various types of

short-term and long-term investments.

H3


Investing l.jpg

T009-01.02

Investing

  • Putting your money to use in order to make money on it.

  • Simple Interest vs. Compound Interest

    • Simple – interest that is computed only on the amount saved.

    • Compound – interest that is computed on the amount saved plus interest previously earned.

  • Securities refers to bonds, stocks, and other documents sold by corporations and governments to raise large sums of money.

H4


Slide3 l.jpg

T009-01.03

Saving

  • Savings is money put aside for future use.

  • Most common reasons to save are:

  • Major purchases

  • Emergencies

    • Saves money for a “rainy day”

  • Retirement

H5


Investing through banks l.jpg

T009-01.04

Investing Through Banks

  • Savings Account

  • Simplest form of saving

  • Offered by all institutions (banks, credit unions, etc.)

  • Generally, a low minimum deposit is required

  • Interest is low and varies from institution to institution

  • Certificate of Deposit

  • Requires a minimum deposit for a minimum amount of time

  • Interest rates are higher than a savings account

H6


Investing through banks continued l.jpg

T009-01.05

Investing Through BanksContinued

  • Money Market Fund

  • Kind of mutual fund, or pool of money, put into a variety of short-term debt by business and government.

H7


9 02 summarize the investing in stocks and bonds l.jpg

T009-02.01

Savings and Investments

9.02 Summarize the investing in stocks and bonds.

H17


Investing in bonds l.jpg

T009-02.02

Investing in Bonds

  • Bonds

    • Promise to pay a definite amount of money at a stated interest rate on a specified maturity date.

  • Bondholder

    • Individual who lends money to a corporation.

H18


Bond terms l.jpg

T009-02.03

Bond Terms

  • Face Value

    • Amount being borrowed by the seller of the bond.

  • Coupon Rate

    • Rate of interest on the bond.

H19


Types of bonds l.jpg

T009-02.04

Types of Bonds

  • Corporate Bonds

    • Issued by corporations

    • Used to finance buildings and equipment.

  • Municipal Bonds

    • Issued by local and state governments.

    • Used to finance schools, roads, airports, etc.

H20


Slide10 l.jpg

T009-02.05

Types of Bonds

  • Treasury Bonds

    • Issued by federal government.

    • Known as Savings or Federal Bonds

    • Types:

      • Series EE Bonds

        • Cost half the face value.

        • After a specified number of years the bond becomes worth the face value.

      • Treasury Bills

        • Issued for three months to one year.

      • Treasury Notes

        • Issued for two to ten years.

      • Treasury Bonds

        • Issued for ten or more years.

H21


Investing in stocks l.jpg

T009-02.06

Investing in Stocks

  • Stock

    • Share of ownership in a business.

  • Stock Certificate

    • Proof of ownership in a corporation

  • Market Value

    • Price at which a stock can be bought or sold.

  • Dividends

    • Part of profits shared with stockholders.

H22


Types of stocks l.jpg

T009-02.07

Types of Stocks

  • Preferred

    • Priority over common stockholders in the payment of dividends.

    • No voting rights.

  • Common

    • General ownership in a corporation and a right to share in the corporation’s profits

    • Right to vote at shareholder meetings

      • One vote per share.

H23


Reading a stock quotation table l.jpg

T009-02.08

Reading a Stock Quotation Table

  • 52 Week Hi – Highest price during previous 52 weeks

  • 52 Week Lo – Lowest price during previous 52 weeks

  • Stock – Company name abbreviated

  • Stock Symbol – Ticker symbol

  • Dividend – Current dividend in dollars per share based on the last dividend paid

  • Yield – Dividend yield based on the current selling prices per share

H24


Slide14 l.jpg

T009-02.09

Reading a Stock Quotation Table

  • PE – (Price/Earnings ratio, comparing the price of the stock with earnings per share).

  • Volume – Number of shares traded.

  • High – Highest price during the day.

  • Low – Lowest price during the day.

  • Close – Closing price for the day.

  • Net Change – Change in the closing price today compared with closing price on the previous day.

H25


Slide15 l.jpg

T009-02.10

Buying and Selling Stock on NYSE

Typical transactions follow these steps:

  • Floor broker (buyer) goes to the trading post at which time this specific stock is traded. It is traded with the floor broker (seller) who has an order to buy.

  • Account executive receives your order to sell stock and relays to the brokerage firm’s representative at the stock exchange.

  • A clerk signals the transaction to a floor broker on the stock exchange floor.

H26


Slide16 l.jpg

T009-02.11

Buying and Selling Stock on NYSE cont.

  • Floor broker (buyer) signals the transaction back to the clerk. Then a floor reporter – an employee of the exchange – collects the information about the transaction and inputs it into the ticker system.

  • The sale appears on the price board, and a confirmation is relayed back to your account executive, who then notifies you of the completed transaction.

H27


Brokerage firm l.jpg

T009-02.12

Brokerage Firm

Sells stocks for consumers

  • Broker

    • Person who acts as a go between for buyers and sellers of securities.

  • Commission

    • Fee charged by a brokerage firm for the buying and/or selling of a security.

H28


Stock exchanges l.jpg

T009-02.13

Stock Exchanges

  • Marketplace where brokers who represent investors meet to buy and sell securities.

  • Examples:

    • NYSE

    • NASDAQ

    • AMEX

    • Exchanges in San Francisco, Boston, Chicago

H29


Types of markets l.jpg

T009-02.14

Types of Markets

  • Bull Market

    • Occurs when investors are optimistic about the economy.

  • Bear Market

    • Occurs when investors are pessimistic about the economy.

H30


Numerical measures for a corporation l.jpg

T009-02.15

Numerical Measures for a Corporation

  • Current Yield

    • Annual dividend divided by current market value.

  • Price/Earnings Ratio

    • Price of one share of stock divided by the earnings per share.

H31


Selling a stock l.jpg

T009-02.16

Selling a Stock

  • Total Return

    • Calculation that includes the annual dividend as well as any increase or decrease in the original purchase price of the investment.

  • Capital Gains

    • Profit from the sale of an asset such as stocks, bonds, or real estate. Taxed as income.

  • Capital Loss

    • Sale of an investment for less than its purchase price. Subtract up to $3,000 in losses from your income.

H32


9 03 summarize other types of investments l.jpg

T009-03.01

Savings and Investment

9.03 Summarize other types of investments.

H48


Investing through insurance l.jpg

T009-03.02

Investing Through Insurance

  • Life Insurance

    • Cash-value insurance provides both savings and death benefits.

H49


Investing in your future l.jpg

T009-03.03

Investing in Your Future

  • Pension

    • Series of regular payments made to a retired worker under an organized plan.

  • Individual Retirement Account (IRA)

    • Tax sheltered retirement plan in which people can annually invest earnings.

    • Types:

      • 401k or 403b contributions are tax deductible and funds are taxed as regular income when they are withdrawn after age 59 ½.

      • Roth IRA contributions are not tax deductible, but investment gains and all funds on which taxes are prepaid are tax free when they are withdrawn after age 59 ½.

H50


Investing in your future25 l.jpg

T009-03.04

Investing in Your Future

  • Annuity

    • Amount of money that an insurance company will pay at definite intervals to a person who has previously deposited money with the company.

H51


Investing through other sources l.jpg

T009-03.05

Investing Through Other Sources

  • Real Estate

    • Land and anything that is attached to it.

    • Mortgage

      • Legal document giving the lender a claim against the property.

    • Home Equity

      • Difference between the price at which you could currently sell your house and the amount owed on the mortgage.

      • Appreciation – general increase in value of a property.

      • Depreciation – general decrease in value of a property.

H52


Investing through other sources27 l.jpg

T009-03.06

Investing Through Other Sources

  • Types of Property

    • Undeveloped Property (Land)

      • Unused land intended only for investment purposes.

    • Commercial Property

      • Land and buildings that produce lease or rental income.

    • Real Estate Investment Trusts (REITs)

      • Works like a mutual fund.

      • Combines funds to invest in real estate.

H53


Collectibles l.jpg

T009-03.07

Collectibles

  • Items of personal interest to collectors.

  • Rare coins, works of art, antiques, stamps, rare books, comic books, sports memorabilia, rugs, ceramics, paintings, and other items that appeal to collector and investors.

H54


Commodities l.jpg

T009-03.08

Commodities

  • Include grain, livestock, precious metals, currency, and financial instruments.

  • Futures

    • Commodity contract purchased in anticipation of higher market prices for the commodity in the near future.

H55


Investing with others l.jpg

T009-03.09

Investing With Others

  • Investment Clubs

    • Small group of people who organize to study stocks and to invest their money.

  • Mutual Fund

    • Created by an investment company that raises money from many shareholders and invests it in a variety of stocks.

      • Limit risk by diversifying investment.

H56


Speculative investment l.jpg

T009-03.10

Speculative Investment

  • Speculator

    • One that has an unusually high risk.

H57


Slide32 l.jpg

T009-04.01

Savings and Investments

9.04 Analyze the factors that affect the rate of return on a given savings or investment plan and calculate the rate of return.

H65


Savings plan l.jpg

T009-04.02

Savings Plan

  • Putting money aside in a systematic order.

  • Ways to put money aside:

    • Regular deposit

    • Automatic deposit

    • Electronic funds transfer

H66


Starting a program l.jpg

T009-04.03

Starting a Program

  • Factors determining a program

    • Safety

      • Assurance that the money you have invested will be returned to you.

    • Liquidity

      • Ease with which an investment can be changed into cash without losing any of its value.

    • Yield

      • Rate of return (percentage of interest that will be added to you r savings over a period of time).

    • Diversification

      • Process of spreading your assets among several different types of investments to lessen risk.

H67


Factors that affect the rate of return on an investment l.jpg

T009-04.04

Factors That Affect the Rate of Return on an Investment

  • Risk - Chance of loss.

  • Rate of Return (yield)

    • Amount of money the investment earns.

    • Compounding frequency is the interest computed on the amount saved plus the interest previously earned.

  • Liquidity

    • Ease with which an investment can be changed into cash.

  • Resistance to inflation

    • Will rate of return keep up with inflation?

  • Tax considerations

H68


Factors that affect the selection of financial institutions l.jpg

T009-04.05

Factors that Affect the Selection of Financial Institutions

  • Services offered

  • Business hours

  • Location

  • On line services

H69


Financial security investments low risk l.jpg

T009-04.06

Financial Security Investments(low risk)

  • Cash

  • Savings Accounts

  • Money Market Accounts

  • Certificate of Deposit

  • US Government Bonds

  • Retirement Accounts

H70


Safety and income investments l.jpg

T009-04.07

Safety and Income Investments

  • US Treasury Securities

  • Conservative Corporate Bonds

  • State and Municipal Bonds

  • Income and Utility Stocks

H71


Growth investments l.jpg

T009-04.08

Growth Investments

  • Income and Growth Stocks

  • Mutual Funds

  • Real Estate

  • Convertible Bonds

H72


Speculation investments high risk l.jpg

T009-04.09

Speculation Investments(high risk)

  • Options

  • Commodities

  • Precious Metals and Gems

  • Speculative Stocks

  • Junk Bonds

  • Collectibles

H73


Calculating rate of return l.jpg

T009-04.10

Calculating Rate of Return

  • Rate of Return = Total Interest Earned divide by Original Deposit

  • Example:

    • If you deposited $100 in account that paid $6.18 interest for one year. What is the rate of return?

    • $6.18/$100 = .0618 = 6.18%

H74


9 05 analyze how saving and investing influences economic growth l.jpg

T009-05.01

Savings and Investments

9.05 Analyze how saving and investing influences economic growth.

H85


Savings and economic growth l.jpg

T009-05.02

Savings and Economic Growth

  • Individual savings allow:

    • Businesses to expand and create more jobs.

    • Demand for goods and services to increase.

  • Failure to save will cause less money to be invested and the economy may slow as a result.

  • Savings contribute to our economic stability

  • Government uses savings to build highways, schools, and public services

H86


9 06 describe wills and other legal documents l.jpg

T009-06.01

Savings and Investments

9.06 Describe wills and

other legal documents.

H89


Wills l.jpg

T009-06.02

Wills

  • Legal document that specifies how you want your property to be distributed after your death.

  • Intestate

    • Die without a legal will

    • State will step in and control the distribution of your estate.

  • Probate

    • Legal procedure of proving a will to be valid or invalid.

H90


Wills46 l.jpg

T009-06.03

Wills

  • Simple Will

    • Leaves everything to your spouse

  • Formal Will

    • Prepared by an attorney.

  • Holographic Will

    • Handwritten will that you prepare yourself

    • Needs to be written, dated, and signed entirely in your own handwriting.

H91


Other legal documents l.jpg

T009-06.04

Other Legal Documents

  • Trusts

    • Legal arrangement that helps manage the assets of your estate for you benefit or that of your beneficiaries.

  • Living Will

    • Document in which you state whether you want to be kept alive by artificial means if you become terminally ill and unable to make such a decision.

  • Power of Attorney

    • Legal document that authorizes someone to act on your behalf.

H92


Slide48 l.jpg

T009-06.05

GuardianPerson who accepts the responsibility of: 1. Providing children with personal care after their parents’ death 2. Managing the parents’ estate for the children until they reach a certain age

H93


9 07 explain how agencies regulate financial markets and protect investors l.jpg

T009-07.01

Savings and Investments

9.07 Explain how agencies regulate financial markets and protect investors.

H98


Regulators l.jpg

T009-07.02

Regulators

  • Securities and Exchange Commission (www.sec.gov)

    • Protect investors and maintain the integrity of the securities markets.

H99


Regulators51 l.jpg

T009-07.03

Regulators

  • NASD (www.nasd.com)

    • Registers member firms, writes rules to govern their behavior, examines them for compliance and disciplines those that fail to comply.

    • Largest private sector provider of financial regulatory services.

    • Has helped bring integrity to the markets and confidence in investors.

H100


Protecting investors l.jpg

T009-07.04

Protecting Investors

  • Department of the Secretary of State (www.secretary.state.nc.us /sec )

  • State Securities Laws

    • Known as “blue sky” laws

    • Intent of laws is to protect the investing public by requiring a satisfactory investigation of both the people who offer securities as investments and of the securities themselves.

    • Securities division addresses investor complaints concerning securities brokers and dealers , investment advisers and commodity dealers as well as complaints about offerings of particular investment vehicles.

H101


ad