1. Organizing Financial Assets
 Direct Investing
 Investors buy and sell securities
themselves, typically through brokerage
accounts.
 Indirect Investing
 The buying and selling of the shares of
investment companies, which in turn hold
portfolios of securities.

2. Direct Investing
 Non marketable Financial Assets
 Savings deposits
 Certificates of deposits
 Money market deposit account
 Money Market
 Treasury bills
 Commercial Papers
 Euro Dollars
 Banker’s acceptances

3. Direct Investing
 Capital Market
 Fixed income
 Equities
 Derivatives market
 Options
 Futures contracts

4. Indirect Investing
 Investment companies
 Unit Investment trust (NIT)
 Mutual Funds
 Open end mutual funds
 Closed end mutual funds

5. Money Market Securities
 Treasury Bill
 Discount Yield =
 Face value – pur price * 360
Face value maturity of bill in days
 Investment yield =
 Face value – pur price * 365
Pur. Price maturity of bill in days

6. Fixed Income Securites
 Capital Market
 Fixed income securities
 Bonds
 Call provision
 Zero coupon bond

7. Fixed Income Securites
 Types of Bonds
 Treasury Bonds
 Municipal Bonds
 Corporates
 Senior Securities
 Debenture
 Convertible Bonds
 Junk Bonds

8. Equity Securities
 Preferred Stock
 Common Stock
 Characteristics of Common Stocks
 Book Value
 Dividends
 Dividend Yield
 Payout Ratio
 Stock Dividend
 Stock Split

9. Equity Securities
 P/E Ratio
 Also called Earning Multiplier
 Can be 10 or 15 times
 Shows the investor confidence on a
particular stock

10. Derivative Securities
 Securities that derive their value in
whole or in part by having a claim on
some underlying security.
 Warrant
 A corporate created option to purchase a
stated number of common shares at a
specified price within a specified time.

11. Derivative Securities
 Options
 Put Option
 Call Option
 LEAPS
 Futures Contracts