The Investment Environment参考.ppt

Chapter 1 The Investment Environment CHAPTER 2 Asset Classes and Financial Instruments * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Systemic Risk and the Real Economy Add liquidity to reduce insolvency risk and break a vicious circle of valuation risk/counterparty risk/liquidity risk Increase transparency of structured products like CDS contracts Change incentives to discourage excessive risk-taking and to reduce agency problems at rating agencies Asset Classes Money market instruments Capital market instruments Bonds Equity Securities Derivative Securities The Money Market Subsector of the fixed-income market: Securities are short-term, liquid, low risk, and often have large denominations Money market mutual funds allow individuals to access the money market. Table 2.1 Major Components ofthe Money Market Money Market Securities Treasury bills: Short-term debt of U.S. government Bid and asked price Bank discount method Certificates of Deposit: Time deposit with a bank Commercial Paper: Short-term, unsecured debt of a company Money Market Securities Bankers’ Acceptances: An order to a bank by a bank’s customer to pay a sum of money on a future date Eurodollars: dollar-denominated time deposits in banks outside the U.S. Repos and Reverses: Short-term loan backed by government securities. Fed Funds: Very short-term loans between banks Yields on Money Market Instruments Except for Treasury bills, money market securities are not free of default risk Both the premium on bank CDs and the TED spread have often become greater during periods of financial crisis During the credit crisis of 2008, the federal government offered insurance to money market mutual funds after some funds experienced losses The Bond Market Treasury Notes and Bonds Inflation-Protected Treasury Bonds Federal Agency Debt International Bonds The Bond Market Municipal Bonds Corporate Bonds Mortgages and Mortgage-Back