Stocks-
• Stocks are appealing to some individuals because they rise in price and to others it is a level of current income. Stocks are highly liquid. Investors are also able to invest in foreign markets.
• Common Stock is a method of equity and is open to the public. Common Stock is the most popular. Each share of stock represents a portion of the proprietorship position in a business. Gives individuals the ability to take part in the return of the firm.Dividends Yields- is a way to measure common stock dividends as a percentage.
• Three reasons to invest in common stock; (1) to use the stock as a warehouse of value, (2) to accumulate capital, (3) to provide a source of income.
• Advantages; (1) the potential return, (2) many stocks are actively traded, (3) no direct management. Disadvantages; (1) risk (2) problem in timing when obtaining the sales, and the doubt of dividends.
• Preferred Stock
• There are some popular forms of Common Stock. Here are just a few; o Blue-Chip Stocks- have a constant record of earnings and dividends. This stock is the best. o Growth Stocks- these stocks earn high rates of growth. o Tech Stocks- these stocks symbolize the technology segment
Bonds- are liabilities
• Two kinds of income with bonds; (1) they provide a generous amount of current income (2) they can often be used to generate substantial amounts of capital gains. Types of Bonds; o Mortgage Bonds- secure asset by claim on real assets o Equipment Trust Certificate- secure bond by types of equipment. o Debenture- is an unsecured bond dispensed on the general credit of the firm.
• Bonds are usually based on the terms or a legal document outlining the features of the bond. Bonds deliver a noteworthy quantity of earnings and it can be used to produce considerable quantities of earnings.
• Bonds are typically low risk and present high ranks of wages with desirable diversification properties. Bonds are extremely flexible investment passage. They can be used either for persons who have high earnings or for those people who go after capital profits.
• Bonds can be used for the conservation and long-standing buildup of capital. For instance, various people, they will devote all or a great amount of their investment funds in bonds because of this sole characteristic.
Mutual Funds
• Mutual funds are monetary services association that collects money from stockholders and capitalize those funds on their behalf in a diversified portfolio of securities.
• The reasons why individuals invest in mutual funds (1) to accomplish diversification in their investment holdings, (2) to acquire the services of specialized cash managers, (3) to produce an attractive rate of return on their investment capital, and (4) and the accessibility they offer.
What are the major reasons investors purchase mutual funds as reported to the Lawrences by the Financial Advisor?
Organizations that decide to issue bonds generally go through a series of steps. Discuss the six steps.
Equity capital represents money put up and owned by shareholders. This money can be used to fund projects and other opportunities under the auspice of creating greater value. This type of capital is typically the most expensive. In order to attract investors, the firms expected returns must consummate with the associated risk ("Financial leverage and,"). To illustrate this, consider a speculative oil drilling operation, this type of operation would require higher promised returns than say a Wal-Mart in order to attract investors. The two primary forms of equity capital are 1) money invested into the business for an ownership stake (i.e. stock) and 2) retained earnings from past profits used to fund future growth through acquisitions, expansions and product development.
...g is also important in fulfilling financial obligations such as debt capital, annuities as well as savings. An effective personal financial plan should manage risk through diversification of investment capital, and the stock market provides investors with a viable option for diversification. Investing in stocks is considered one of the most profitable alternatives of personal financial planning, and is generally included to financial plans as an investment vehicle for additional income streams. Investing in stocks also has several benefits, key among them being increasing current and future cash inflows from investments. In addition, stocks offer investors a viable option through which they can achieve their financial goals for retirement, saving or consumption. Stocks are therefore useful securities that can be used to build wealth and secure financial stability.
Highest returns. Stocks have given the one of the highest historical returns among the various asset classes over the long term.
The buyer of the bond is giving up complete ownership of the bond to receive a higher coupon rate from S&S Air. The buyer of the bond is giving up the possible future value of the bond if bought early, so there is a higher risk and higher coupon rate associated with the bond. This provides an advantage for S&S Air, however, because the bond can be bought back at the specified price during the specified time to make a profit for the company as long as the specified time is when there is a favorable interest
A bail bond is typically used when an incarcerated individual has been ordered by the judge to give bail prior to being released before the trial begins. Once a bonds is posted for this individual, this accused person is removed from the custody of the police until the final outcome determined during the trial. If the person does not come back to court
Another of the hybrid types is the income bond, which has a fixed maturity but on which interest is paid only if it is earned. These bonds developed in the United Statesout of railroad reorganizations, when investors holding defaulted bonds were willing to accept an income obligation in exchange for their own securities because of its bond form; the issuer for his part was less vulnerable to the danger of another bankruptcy
Common stock is a term that is synonymous with investing; it is ownership in a public company. The stock owner is granted voting rights in addition the ability to receive dividends. It is a common terminology that is heard frequently in terms of the daily performance of the stock market whether it was up or down.
From that perspective, if our model’s rates were lower than Deutsche Bank’s rates, the bond was underpriced in the market; therefore we would recommend buying the bond. This would allow investors to buy at a bargain since they would be paying less than what the bond is actually worth. Based on our results, we recommend that investors purchase the bonds with the maturities of three through nine years and the bond with a maturity of fifteen years. All of these bonds are underpriced in the market and should be purchased to take advantage of the arbitrage opportunities. We also recommend that investors should sell the bonds with maturities of one, twenty, and twenty-five years because their prices were greater than Deutsche Bank’s prices, thus making them overpriced in the market. The bonds with a two-year and ten-year maturities are, by design, equally priced between the two methods, so, nothing should be done with them. These are the findings that our group compiled and further information on our methodology, results, and recommendations will be provided in the paragraphs
Zero coupon bonds, more commonly known as “strips” or “zeros”, are fixed income securities that unlike other bonds, pay no interest until maturity. This means that instead of paying semi-annual interest like other bonds, the interest is compounded throughout the life of the bond and is paid in full upon maturity. Zero coupon bonds are ideal long-term investments for people who have a specific situation, which calls for a specific amount of money to be acquired at a future date, mainly ten to twenty years in the future. These bonds offer a great variety of benefits that are attractive to investors who are looking for more of a long-term investment. They also pose a few drawbacks, but are outweighed by their advantages which make them a sound investment.
...price of amount is of rupees one thousand and five hundred rupees in which highest winning rate is thirty lacs second prize is of ten lacs and third and last prize is of eighteen thousand five hundred. All these three bonds are operated by middle class people for their small savings and investment and low costing price of per prize bond. Now talk about prize bonds used by some upper middle class people that are of rupees seven thousand five hundred and fifteen thousand.
Historically, the Malaysia Government Bond 10Y reached an all time high of 5.35 in April of 2004 and record low of 2.87 in January of 2009. Thus, the bond market in Malaysia are normally fluctuate, the risk taken by the bondholders could be minimized by getting ready homework about the bonds which are going to buy with. Bonds can be a great instrument to generate income and widely considered to be a safe investment, especially compared to equity securities such as stocks. However, However, investors need to be aware of some potential traps and risks to holding corporate and/or government bonds. Let us expose the bonds potential risks. Firstly is the inflation risk. When an investor buys a bond, he or she crucially commits receiving a rate of return, either fixed or flexible, for the period of the bond or at least as long as it is held. But what happens if the cost of living and inflation increase dramatically, and at a quicker rate than income investment? When that happens, investors will see their purchasing power corrode and may actually achieve a negative rate of return (because of factoring in
The execution of our investment strategy occurred in three stages. First, we invested in t-bills and bonds according to our original set out investment plan. This was to decrease potential losses and risk associated with the declining equity market. Therefore, we invested about two hundred thousand of our funds into these low risk assets to maintain buying power. Due to inflation, we did not want to lose buying power by leaving funds in an account without earning interest. Further, we invested a small portion of funds into the commodity market. With a slumping equity market and a positive outlook on the gold commodity, we invested in Gold Corporation at the same time we invested in income assets.
As previously mentioned, bonds are one of the more popular types of financial investment in