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Nickels McHugh McHugh

Nickels Cover. Nickels McHugh McHugh. Chapter. Securities Markets: Financing and Investing Opportunities. 20. 20- 2. Functions of Securities Markets. Long-Term Funding for Businesses Place to Buy/Sell Securities (Investments). Capital Markets. Primary Markets (IPO's)

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Nickels McHugh McHugh

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  1. Nickels Cover Nickels McHugh McHugh

  2. Chapter Securities Markets: Financing and Investing Opportunities 20 20-2

  3. Functions ofSecurities Markets • Long-Term Funding for Businesses • Place to Buy/Sell Securities (Investments)

  4. Capital Markets • Primary Markets (IPO's) • Secondary Markets

  5. Preferred or Common Investment never has to be repaid Not legally obligated to pay dividends Secured or Debenture Must be repaid on maturity date Interest must be paid whenever specified Debt vs Equity Financing Debt Financing Equity Financing

  6. Investment Banker • Assist Sale/Issue of New Securities • Underwrite issues • Sells to Institutional Investors

  7. Bond Market • Coupon/Interest Rate • Denomination ($1,000) • Principal • Maturity Date • Types • Unsecured/Debenture • Secured • Mortgage

  8. Advantages No Vote Interest is Tax-Deductible Temporary Source of Funds Disadvantages Increase Debt Legal Obligation to Pay Interest Repaid on Maturity Date Bonds

  9. Special Bond Features • Sinking Fund • Callable • Convertible

  10. What is Stock? • Ownership • Certificate • Par Value • Dividends • Common vs. Preferred

  11. Advantages No Repayment No Legal Obligation Does Not Create Debt Disadvantages Voting Rights Dividends not Tax-Deductible Management Works to Keep Stockholders Happy Stock

  12. Organized Securities Exchanges • New York Stock Exchange (NYSE) • Over-the-Counter (OTC) • NASDAQ • American Stock Exchange (AMEX) • Foreign Stock Exchanges

  13. Securities Regulation • Securities Act of 1933 • Prospectus • Securities Exchange Act of 1934 • Insider Trading

  14. Broker/Brokerage* Full Service = $480 Discount = $170 On-Line = $ 20 *Cost to Trade 500 Shares of IBM @ Price of $101.50

  15. Components for Optimal Portfolio Performance • Diversification • Timelines • Safety & Risk • Income & Total Return

  16. Investment Criteria • Risk • Yield • Duration • Liquidity • Tax Consequences

  17. Features of Stock • Growth vs. Income • Capital Gain vs. Dividend • Blue Chip vs. Penny • Market Order • Limit Order • Stock Split

  18. Bull Market Bear Market Stock Market Fluctuations

  19. Mutual Funds • Pool Investors’ Money • Best for Small Investors • Index Fund • Diversification • No-Load vs. Load • Open-End vs. Closed-End

  20. Traditional Stocks/Bonds Gov’t Securities/CDs Money Market or Mutual Funds Real Estate High-Risk Stock on Margin Junk Bonds Commodities Types of Investments

  21. Measures of Investment • Stock Indexes- Big Charts.com • DJIA • S & P 500 • Amex • NASDAQ • Stock Quotations • Bond Quotations • Mutual Fund Quotations

  22. Stock Quotes • % Change in YTD Price • High/Low Price • Company Name & Stock Symbol • Last Dividend Per Share • Dividend Yield • P/E Ratio • # of Shares Traded • Closing Price • Net Change- Price

  23. Mutual Fund Quotations • Fund Name • Net Asset Value (NAV) • Net Change in NAV • YTD Return • Long-Term Return

  24. Dow Milestones

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