Investment in Debt Securities

Investment in Debt Securities - UniversityofRhodeIsland

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University of Rhode Island BUS 402 Advanced Accounting 2010 - 2011 Joseph M. D’Adamo Course Outline #1: Investments in Debt Securities Page 1 of 26 I. Overview of Investments in Debt Securities A. Securities: General Description FASB ASC 320-10-20 Glossary and Main Glossary Security The evidence of debt or ownership or related-right.  It includes options and warrants as well as debt and stock.  A share, participation, or other interest in property or in an entity of the issuer or an obligation of the issuer that has all  of the following characteristics: a. It is either represented by an instrument issued in bearer or registered form or, if not represented by an  instrument, is registered in books maintained to record transfers by or on behalf of the issuer. b.  It is of a type commonly dealt in on securities exchanges or markets or, when represented by an  instrument, is commonly recognized in any area in which it is issued or dealt in as a medium for  investment. c.  It either is one of a class or series or by its terms is divisible into a class or series of shares, participations,  interests, or obligations. 1. Documents  formally   evidencing  legal agreements  with  monetary values   Instruments a. Securities are Legal Instruments Describe enforceable obligations and rights Formally identify and attribute responsibilities to issuer Evidences interests, rights, and obligations conveyed to holders b. Securities are Financial Instruments Evidence of ownership in an entity   Equity securities or Rights to receive cash and the payoff terms   Debt securities or Rights to receive or deliver cash or other financial instruments   Derivatives
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Course Outline #1: Investments in Debt Securities  Page 2 of 26 c. Securities are Investment Contracts  that  legally  must involve:  Investments of  money  by  many parties Returns  provided from the  efforts of others 2. Financial Instruments are Securities  a. Readily Transferable Holders can transfer their positions to others through sale or exchange transactions  without the approval of the issuers b. Subject to Regulatory Requirements  (with exceptions such as small, private issues) File a registration statement with the SEC Comply with the SEC reporting requirements and laws and regulations 3. Types of Legal Agreements a. Financial Interests in the Issuing Entity Ownership     Common stock, Preferred stock Financing arrangements to raise capital in exchange for shares of ownership  (equity interests) in the issuer (or certain assets or activities)  Profits or assets of the issuer = security for returns
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This note was uploaded on 04/03/2012 for the course BUS 402 taught by Professor Joshephd'adamo during the Fall '09 term at Rhode Island.

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Investment in Debt Securities - UniversityofRhodeIsland

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