Chapter One

Chapter One

1. Capital Markets

   • Primary Market
     • Inital Public Offering
     • First trade
   • Secondary Market
     • Trade amongst themselves

2. Wall Street Movie

   • Bud Fox
     • Diversification
       • Bud bought stocks from multiple different sectors
     • Manipulation of stocks
       • Bud would get many of his co-workers to buy these stocks to inflate the prices
     • Other experts
       • Bud Learned from other well known investors like Gordon Gekko
     • Important information
       • In the beginning Bud used insider information. Later he would analyze trends

3. Common Stocks Investment and Strategies

   • Passive Stock Strategies
     • Maximize long term return
     • Buy and hold Strategy
       • Actively managing, incur transaction costs and mistakes
   • Active Stock Strategies
     • Profitable conditions
     • Sector Rotation
       • Shifting between four major sectors
         • Interest-sensitive stocks
         • Consumer durable stocks
         • Capital Goods stock
         • Defensive stocks
     • Ongoing buying and selling
   • Efficient Market Hypothesis
     • Always traded at fair value

4. Warren Buffet & Value Investing

   • Value Investing
     • Traded below intrinsic value
     • Margin of Safety
       • Buy at large enough discount to allow for error
   • Warren Buffet
   • ROE
     • Return of equity
     • Analyzed for 5 to 10 years
   • Fundamentals
     • Qualitative & quantitative information
   • Economic Moat
     • Maintain advantages over competitors
   • Intrinsic Value
     • Actual value of company
   • Liquidation Value
     • Company's physical assets

5. Alternative Investments

   • Non-Marketable instruments
     • GIC
       • Guaranteed 100% of original investment
       • Guaranteed investment certificate
     • Savings
       • Portion of disposable income
       • Total income - Expenses
     • Canada savings bond
       • Issued by Bank of Canada
       • Savings instrument
   • Money Market instruments
     • Treasury Bills
       • Type of low risk benchmark asset
     • Commercial Paper
       • Short-term, unsecured promissory notes, issued by large companies
     • Eurodollars
       • Dollar-denominated deposits held in forgien banks
     • Repurchase Agreements
       • Agreement between borrower and lender
       • Sell and repurchase money market securities
     • Banker's Acceptance
       • Guaranteed payment
       • Specified amount, at future date
   • Capital Markets Securities
     • Government Bonds
       • Long term debt instrument
     • Corporate Bonds
       • Raise Capital
     • Income Trust
       • Holds income producing assets
       • Trades unit like a stock
     • Equities
       • An ownership interest
   • Derivatives Market
     • Options
       • Right to buy/sell stated number of shares
       • Specified price and period
     • Futures
       • Future exchange of particular asset
       • Specified price and period
   • Indirect Investing
     • Mutual funds
       • Pools of money from investors,
       • Invested in stocks, bonds, money market instruments
     • Exchange Traded funds
       • Marketable security, tracks commodity, bonds

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