Investment Analysis final Study Guide chap 1-3

attempting to identify mispriced securities or to forecast broad market trends.

conflicts of interest between managers and stockholders.

allocation of an investment portfolio across broad asset classes.

securities providing payoffs that depend on the values of other assets.

an ownership share in a corporation.

claims on real assets or the income generated by them.

pay a specified cash flow over a specific period.

firms specializing in the sale of new securities to the public, typically by underwritting the issue.

buying and holding a diversified portfolio without attempting to identify mispriced securities.

a market in which new issues of securities are offer to the public.

investments in companies whose shares are not traded in public stock markets

markets in which previously issued securities are traded among investors.

analysis of the value of securities.

choice of specific securities within each asset class.

risk of breakdown in the financial system, particularly due to spillover effects from one market into others.

money invested to finance new, privately held firms
think silicon valley.

the right to buy an asset at a specified exercise price on or before a specified expiration date.

index return equals the weighted average of the returns of each component security, with weights proportional to outstanding market value.

a bank time deposit.

short-term unsecured debt issued by large corporations.

ownership shares in publicly held corporation. Shareholders have voting rights and may receive dividends.

long-term debt issued by private corporations typically paying semiannual coupons and returning the face value of the bond at maturity.

an index computed from a simple average of returns.

obliges traders to purchase or sell an asset at an agreed upon price at a specified future date.

Lending rate among banks in the London market.

tax-exempt bonds issued by state and local governments.

an average computed adding the prices of the stocks and dividing by a "divosor".

the right to sell an asset at a specified exercise price on or before a specified expiration date.

short-term government securities issued at a discount from face value and returning the face amount at maturity.
typically one year or less

U.S. government debt that matures in 2 to 10 years and pays a fixed interest (coupon) every six months.

U.S. government debt that matures in 20 to 30 years and also pays a fixed interest every six months.

the price at which a dealer or other trader will sell a security.

an exchange or electronic platform whre all traders can convene to buy or sell an asset.

the difference between the bid and asked prices.

the price at which a dealer or other trader is willing to purchase a security.

large transactions in which at least 10,000 shares of stock are bought or sold.

electronic trading networks where participants can anonymously buy or sell large blocks of securities.

markets in which traders specializing in particular assets buy and sell for their own accounts.

a previously private compny floats existing shares on the stock market but does not raise funds by issuing new shares to the public.

computer networks that allow direct trading without the need for market makers.

a subset of algorithmic trading that relies on computer programs to make very rapid trading decisions.

first public sale of stock by a formerly private company.

the time it takes to accept, process, and deliver a trading order.

an order specifying a price at which an investor is willing to buy a security.

an order specifying a price at which an investor is willing to sell a security.

describes securities purchased with money borrowed in part from a broker.

an informal network of brokers and dealers who negotiate sales of securities.

the computer-linked price quotation and trade execution system.

market for new issues of securities.

primary offerings in which shares are sold directly to a small group of institutional or wealthy investors.

a description of the firm and the security it is issuing.

market for already-exisitng securities.

the sale of shares not owned by the investor but borrowed through a broker and later purchases to replace the loan.

publicly traded company created solely to raise capital through an initial public offering to acquire or merge with a private company, effecitely taking it public. have no commercial operations and exist only to find a target company.