Chap03 - Chapter 3 Overview of Security Types 1 Chapter...

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1 Chapter 3  Overview of Security Types
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2 Chapter Outline Interest-bearing securities Money Market Instruments Fixed-Income securities Equities Common stocks Preferred Stocks Derivatives Futures Options
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3 Interest-Bearing Assets Money market instruments are short term debt obligations of large corporations or governments Fixed-income securities are longer-term debt obligations of corporations or governments.
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4 Money Market Instruments Examples : U.S. Treasury bills (T-bills), bank certificates of deposit (CDs), corporate and municipal money market instruments. Potential gains/losses . Price quotations Discount basis
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5 Fixed-Income Securities Examples : U.S. Treasury notes, corporate bonds, car loans, student loans. Potential gains/losses :
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6 Quote Example: Fixed-Income Securities Price quotations from www.wsj.com: You will receive 6.875% of the bond’s face value each year in 2 semi-annual payments. The price (per $100 face) of the bond when it last traded. The Yield to Maturity (YTM) of the bond.
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7 Quote Example: Fixed-Income  Securities Price Quotations in The Wall Street Journal Company (Ticker) Coupon Maturity Last Price Last yield EST Spread UST Est. $ VOL (000’s) KeyCorp Capital Vii (KEY) 5.700 Jun 15, 2035 97.308 5.892 149 30 37,800 HSBC Finance Corp (HSBC) 6.500 Jan 24, 2006 101.283 3.925 n.a. n.a. 37,468 BellSouth Corp (BLS) 4.750 Nov 15, 2012 99.778 4.785 60 10 36,901
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8 Equities Common stock : Represents ownership in a corporation. A part owner receives a pro rated
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This note was uploaded on 09/08/2010 for the course BUS 172A at San Jose State.

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Chap03 - Chapter 3 Overview of Security Types 1 Chapter...

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