Lecture 2 Sep 7 2011

Lecture 2 Sep 7 2011 - FINA3104:...

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FINA 3104: Investment Analysis and Portfolio Management Lecture 2 – Trading Securities Darwin Choi September 7, 2011 Recap from Last Lecture Review of the Syllabus Course Overview Two main components of investments: The current–future tradeoff Uncertain environment 2
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Outline of Today’s Lecture Securities Indexes How Securities Are Traded Buying on Margin Short Selling 3 Classification Tree of Assets 4 Financial Assets Marketable (Tradable) Derivative Securities Depend on the Value of Other Assets Primitive Securities Claims on Real Assets Debt Bills, Notes, Bonds Equity Stocks Futures Options Non-Marketable Debt Loans, Mortgages, Insurance Policies Equity Net Worth (Personal Wealth Net of Debt) Securitized Claims Package Non-Marketable Securities into Marketable Portfolios
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Classification Tree of Securities 5 Marketable Securities Derivative Securities Claims on Other Claims Primitive Securities Claims on Real Assets Money Market Maturity 1 year Capital Market Maturity > 1 year Futures Options Government Debt Treasury Bills Exchange Fund Bills Corporate Debt Commercial Paper Bank Debt Certificates of Deposit Eurodollars Bond Market Fixed Income Government Debt Treasury Notes & Bonds Exchange Fund Notes Equity Market Residual Income International Bonds Eurobonds Securitized Debt Mortgage-backed, etc. Corporate Debt Bonds, Debentures, H-Bonds Preferred Stock Priority over common stock, Receive cumulative dividends Common Stock H-Shares, Red chips Receive dividends Items in red are specific to Hong Kong Exchange Fund: Manages the HK$ vs. US$ H-Bonds: HK$ bond of a PRC issuer H-Shares: HK$ share of a PRC issuer Red Chips: HK incorporated with PRC control Securities: Money Market Treasury Bills: Short term debt issued by the US Treasury Exchange Fund Bills: Short term debt issued by the Hong Kong Monetary Authority (HKMA) Commercial Paper: Short term unsecured (i.e., not backed by any collateral) debt issued by large companies Certificates of Deposit (CDs): Time deposit with a bank Eurodollars: US Dollar deposits at banks outside the US 6
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Securities: Capital Market (Bond) Treasury Notes and Bonds: Debt issued by the US
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This note was uploaded on 11/27/2011 for the course FINA 3104 taught by Professor Darwin during the Spring '11 term at HKUST.

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Lecture 2 Sep 7 2011 - FINA3104:...

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