1、Financial Marketsand Instruments,Chapter 2,Major Classes of Financial Assets or Securities,Debt Money market instruments BondsCommon stockPreferred stockDerivative securities,Markets and Instruments,Money MarketDebt InstrumentsDerivativesCapital MarketBondsEquityDerivatives,Money Market Instruments,
2、Treasury billsCertificates of depositCommercial PaperBankers AcceptancesEurodollarsRepurchase Agreements (RPs) and Reverse RPsFederal Funds,Money Market Instrument Yields,Yields on Money Market Instruments are not always directly comparable.Factors influencing yields. Par value vs. investment value3
3、60 vs. 365 days assumed in a year (366 leap year)Bond equivalent yield,Bank Discount Rate (T-Bills),Rbd = bank discount rateP = market price of the billn = number of days to maturity,Bond Equivalent Yield,Cant compare T-bill directly to bond:360 vs 365 days Return is figured on par vs. price paidAdj
4、ust the bank discounted rate to make it comparable.,Bond Equivalent Yield: Sample T-Bill,Capital Market - Fixed Income Instruments,Publicly Issued InstrumentsUS Treasury Bonds and NotesAgency Issues (Fed Gov)Municipal BondsPrivately Issued InstrumentsCorporate BondsMortgage-Backed Securities,Capital
5、 Market - Equity,Common stockResidual claimLimited liabilityPreferred stockFixed dividends - limitedPriority over commonTax treatment,Stock Indexes,UsesTrack average returnsComparing performance of managersBase of derivativesFactors in constructing or using an Index Representative? Broad or narrow?
6、How is it constructed?,Examples of Indexes - Domestic,Dow Jones Industrial Average (30 Stocks)Standard & Poors 500 CompositeNASDAQ CompositeNYSE CompositeWilshire 5000,Examples of Indexes - Intl,Nikkei 225 & Nikkei 300FTSE (Financial Times of London)DaxRegion and Country IndexesEAFEFar EastUnited Ki
7、ngdom,Bond Indexes,Lehman BrothersMerrill LynchSalomon BrothersSpecialized IndexesMerrill Lynch Mortgage,Construction of Indexes,How are stocks weighted?Price weighted (DJIA)Market-value weighted (S&P500, NASDAQ)Equally weighted (Value Line Index)How returns are averaged?Arithmetic (DJIA and S&P500)
8、Geometric (Value Line Index),Averaging Methods,Component ReturnA=10% B= (-5%) C = 20%Arithmetic Average.10 + (-.05) + .2 / 3 = 8.33%Geometric Average(1.1) (.95) (1.2)1/3 - 1 = 7.84%,Derivatives Securities,OptionsBasic PositionsCall (Buy)Put (Sell)TermsExercise PriceExpiration DateAssets,Futures Basi
9、c PositionsLong (Buy)Short (Sell)TermsDelivery DateAssets,Financial Marketsand Instruments,Chapter 2,Major Classes of Financial Assets or Securities,Debt Money market instruments BondsCommon stockPreferred stockDerivative securities,Markets and Instruments,Money MarketDebt InstrumentsDerivativesCapi
10、tal MarketBondsEquityDerivatives,Money Market Instruments,Treasury billsCertificates of depositCommercial PaperBankers AcceptancesEurodollarsRepurchase Agreements (RPs) and Reverse RPsFederal Funds,Money Market Instrument Yields,Yields on Money Market Instruments are not always directly comparable.F
11、actors influencing yields. Par value vs. investment value360 vs. 365 days assumed in a year (366 leap year)Bond equivalent yield,Bank Discount Rate (T-Bills),Rbd = bank discount rateP = market price of the billn = number of days to maturity,Bond Equivalent Yield,Cant compare T-bill directly to bond:
12、360 vs 365 days Return is figured on par vs. price paidAdjust the bank discounted rate to make it comparable.,Bond Equivalent Yield: Sample T-Bill,Capital Market - Fixed Income Instruments,Publicly Issued InstrumentsUS Treasury Bonds and NotesAgency Issues (Fed Gov)Municipal BondsPrivately Issued In
13、strumentsCorporate BondsMortgage-Backed Securities,Capital Market - Equity,Common stockResidual claimLimited liabilityPreferred stockFixed dividends - limitedPriority over commonTax treatment,Stock Indexes,UsesTrack average returnsComparing performance of managersBase of derivativesFactors in constr
14、ucting or using an Index Representative? Broad or narrow? How is it constructed?,Examples of Indexes - Domestic,Dow Jones Industrial Average (30 Stocks)Standard & Poors 500 CompositeNASDAQ CompositeNYSE CompositeWilshire 5000,Examples of Indexes - Intl,Nikkei 225 & Nikkei 300FTSE (Financial Times of
15、 London)DaxRegion and Country IndexesEAFEFar EastUnited Kingdom,Bond Indexes,Lehman BrothersMerrill LynchSalomon BrothersSpecialized IndexesMerrill Lynch Mortgage,Construction of Indexes,How are stocks weighted?Price weighted (DJIA)Market-value weighted (S&P500, NASDAQ)Equally weighted (Value Line I
16、ndex)How returns are averaged?Arithmetic (DJIA and S&P500)Geometric (Value Line Index),Averaging Methods,Component ReturnA=10% B= (-5%) C = 20%Arithmetic Average.10 + (-.05) + .2 / 3 = 8.33%Geometric Average(1.1) (.95) (1.2)1/3 - 1 = 7.84%,Derivatives Securities,OptionsBasic PositionsCall (Buy)Put (Sell)TermsExercise PriceExpiration DateAssets,Futures Basic PositionsLong (Buy)Short (Sell)TermsDelivery DateAssets,谢谢观看/欢迎下载,BY FAITH I MEAN A VISION OF GOOD ONE CHERISHES AND THE ENTHUSIASM THAT PUSHES ONE TO SEEK ITS FULFILLMENT REGARDLESS OF OBSTACLES. BY FAITH I BY FAITH,
