Exam1topicsFall2010 - Asset allocation C | vs security...

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Asset allocation vs security selection The asset allocation decision is the choice among these broad asset classes, while the security selection decision is the choice of which particular securities to hold within each asset class. Active vs passive investing Active management is the attempt to improve performance wither by identifying mispriced securities or by timing the performance of broad asset classes-for example, increasing one’s commitment to stocks when one is bullish on the stock market. Passive management calls for holding highly diversified portfolios without spending effort or other resources attempting to improve performance through security analysis. Types of securities and their characteristics Money market(ST)-T-bills, Federal funds Bond market(LT)-bonds, debt Derivative markets-options, futures and forwards, swaps taxable bond yields (s ) with yields on munis (s ) Stock indexes: characteristics and uses Measure mkt performance, benchmark to valuate performance, base of derivatives. price weighted, value-weighted and equally weighted stock indexes
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This note was uploaded on 10/22/2010 for the course FIN 331 taught by Professor Pinto,k during the Fall '08 term at N. Arizona.

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Exam1topicsFall2010 - Asset allocation C | vs security...

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