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Chapter 14 - • Types of Investments(cont’d • Types of...

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Chapter 14: Investing Fundamentals Chapter Objectives Describe the common types of investments Explain how to measure the return on investments Identify the risks of investments Explain the tradeoff between the return and risk of investments Describe common investment mistakes that should be avoided Types of Investments Money market securities Stocks Primary and secondary stock markets Primary market: a market where newly issued securities are traded Initial public offering (IPO): the first offering of a firm’s stock to the public Secondary market: a market where existing stocks are traded Financial Planning Online: IPOs Go to: http://www.renaissancecapital.com/IPOHome/Marketwatch.aspx This Web site provides information about firms that are about to engage in an IPO and also summarizes the performance of recent IPOs
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Unformatted text preview: • Types of Investments (cont’d) • Types of stock investors Institutional investors: professionals who are responsible for investing the money of a financial institution on behalf of their clients Portfolio managers: employees of financial institutions who make investment decisions Individual investors: individuals who invest a portion of their own money Day traders: investors who buy stocks and then sell them on the same day • Types of Investments (cont’d) • Return from investing in stock Returns come through dividends and price appreciation Growth stocks: stocks of firms with substantial growth opportunities Income stocks: stocks that provide investors with periodic income in the form of large dividends • Financial Planning Online: Price Trends of Your Stocks...
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