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23 Cards in this Set
- Front
- Back
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Real Assets
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Assets used to produce goods and services
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Financial Assets
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Claims on real assets or the income generated by them
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Investment
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Commitment of curent resources in the expectation of derving greater resources in the future
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Equity
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An ownership share in a corporation.
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Derivative Securities
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Securities providing payoffs that depend on the values of other assets.
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Fixed-income securities
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Pay a specified cash flow over a specific period.
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Agency Problems
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Conflicts of interest between managers and stockholders.
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Asset allocation
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Allocation of an investment portfolio across broad asset classes.
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Security Selection
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Choice of specific securities within each asset class
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Security Analysis
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Analysis of the value of securities
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Risk-return trade-off
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Assets with higher expected returns entail greater risk.
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Passive management
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Buying and holding a diversified portfolio without attempting to identify mispriced securities.
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Active management
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Attempting to identify mispriced securities or to forecast broad market trends.
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Financial Intermediaries
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Institutions that "connect" borrowers and lenders by accepting funds from lenders and loaning funds to borrowers.
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Investment Companies
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Firms managing funds for investors. An investment company may manage several mutual funds.
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Investment bankers
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Firms specializing in the sale of new securities to the public, typically by underwriting the issue.
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Primary market
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A market in which new issues of securities are offered to the public.
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Secondary market
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Previously issued securities are traded among investors.
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Globalization
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Tendency toward a worldwide investment environment, and the integration of international capital markets.
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Pass-through securities
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Pools of loans (such as home mortgage loans) sold in one package. Owners of pass-throughs receive all of the principal and interest payments made by the borrowers.
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Securitization
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Poling loans into standardized securities backed by those loans, which can then be traded like any other security.
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Bundling, unbundling
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Creation of new securities either by combining primitive and derivative securities into one composite hybrid or by separating returns on an asset into classes.
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Financial engineering
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The process of creating and designing securities with custom-tailored characteristics.
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