投资学精要-博迪-第八版-课后答案-Chapter2.doc

Chapter02-AssetClassesandFinancialInstruments

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Chapter02

AssetClassesandFinancialInstruments

Commonstockisanownershipshareinapubliclyheldcorporation.Commonshareholdershavevotingrightsandmayreceivedividends.Preferredstockrepresentsnonvotingsharesinacorporation,usuallypayingafixedstreamofdividends.Whilecorporatebondsarelong-termdebtbycorporations,typicallypayingsemi-annualcouponsandreturningthefacevalueofthebondatmaturity.

WhiletheDJIAhas30largecorporationsintheindex,itdoesnotrepresenttheoverallmarketnearlyaswellasthe500stockscontainedinTheWilshireindex.TheDJIAissimplytoosmall.

Theyareshortterm,verysafe,andhighlyliquid.Also,theirunitvaluealmostneverchanges.

Treasurybills,certificatesofdeposit,commercialpaper,bankers’acceptances,Eurodollars,repos,reserves,federalfundsandbrokers’calls.

AmericanDepositoryReceipts,orADRs,arecertificatestradedinU.S.marketsthatrepresentownershipinsharesofaforeigncompany.Investorsmayalsopurchasesharesofforeigncompaniesonforeignexchanges.Lastly,investorsmayuseinternationalmutualfundstoownsharesindirectly.

Becausetheyproducecouponsthataretaxfree.

Thefedfundsrateissimplytherateofinterestonveryshort-termloansamongfinancialinstitutions.TheLondonInterbankOfferRate(LIBOR)istherateatwhichlargebanksinLondonarewillingtolendmoneyamongthemselves.

Generalobligationbondsarebackedbythelocalgovernments,whilerevenuebondshaveproceedsattachedtospecificprojects.Arevenuebondhaslessguarantees,therefore,itisriskierandwillhaveahigheryield.

Corporationsmayexclude70%ofdividendsreceivedfromdomesticcorporationsinthecomputationoftheirtaxableincome.

Limitedliabilitymeansthatthemostshareholderscanloseineventofthefailureofthecorporationistheiroriginalinvestment.

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