Financial instruments major classes of financial assets money. Information about financial instruments core capital. You will learn about common stock and the characteristics of common stocks and common. Liabilities what a company owes to its creditors in future. What are the key differences between common stock, preferred stock, and corporate bonds. This publication provides a broad overview of the current requirements of ias 32, financial instruments. Maximum 270 days, usually 1 to 2 months 3 months or less are liquid if marketable unsecured, rated, mostly high quality discount new innovation. Introduction to various asset classes equity, debt, gold. Youll explore how financial markets actually operate in the real world, focusing on how and where securities are traded and how various market types differ from one another in practice. Chapter 2 asset classes and financial instruments basic 1. Download chapter 2 asset classes and financial instruments ppt for free.
Asset classes and financial instruments term paper. From there, youll learn about the wide range of financial instruments available in major asset classes, their features and valuations. Asset classes are made up of instruments which often behave similarly to one. Since the stock price is greater than the exercise price, you will not exercise the put. Chapter 2 asset classes and financial instruments solutions.
Chapter 2 asset classes and financial instruments after studying this chapter you should be able to. Study 72 chapter 2 asset classes and financial instruments flashcards from hayley n. Fixed income security longer term borrowing instruments common stock. A financial claim is an asset that typically entitles the creditor to receive funds or other resources from the debtor under the terms of a liability. Chapter 2 asset classes and financial instruments chapter 2. It consists of very short term debt securities that usually are highly marketable. There is always a possibility that the option will be inthemoney at some time prior to expiration. The final chapter of this brochure, basic investment risks, is intended to alert. Which of the following is not a characteristic of a money market instrument. Investments 11th edition solutions mba 552 studocu. Displaying powerpoint presentation on chapter 2 asset classes and financial instruments available to view or download.
Which of the following is not a money market instrument. Each share of common stock entitles its owner to one. Chapter 02 asset classes and financial instruments answer key multiple choice questions 1. Chapter 2 asset classes and financial instruments 29. Financial instruments are assets that can be traded. Preferred stock is like longterm debt in that it typically promises a fixed payment each year. Without some general guidelines on what such terms mean, and how such products might serve the varied needs of responsible investors. The 7year recovery period has been extended for qualified. Also explained in the chapter are the general characteristics of common stock.
Pdf financial investments javanshir mammadli academia. Asset classes and financial instruments money market securities characteristics. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Confirming pages chapter two asset classes and financial. Questions on asset classes and financial instruments essay. The right to buy an asset for a specified price, called exercise or. The 3year recovery period has been extended for race horses 2 years old or younger placed in service before january 1, 2021. Chapter 2 asset classes and financial instruments 2 6 4. Financial instruments may give rise to financial claims. Chapter 02 asset classes and financial instruments 4.
Preferred stock is also like longterm debt in that it does not give the holder voting rights in the firm. This is done in terms of the phases of the investment management process. Asset backed commercial paper is backed by a loan or security. Confirming pages chapter 2 asset classes and financial instruments 31 commercial paper is considered to be a fairly safe asset, because a firms condition presumably can be monitored and predicted over a term as short as 1 month. Financial instruments ind as 109 in 1 hour full revision. Download chapter 2 asset classes and financial instruments. Chapter 2 asset classes and financial instruments 25 exercising the option.
Although the debt of federal agencies was never explicitly insured by the federal govern ment, it had long been assumed that the government would assist an agency nearing default. With a zero tax bracket, the aftertax yield for the taxable bond is the same as the beforetax yield 5%, which is greater. Fin 435 exam 1 content chapter 1 the investment environment chapter 2 asset classes and financial instruments chapter 3 how. They can also be seen as packages of capital that may be traded. Asset classes and financial instruments money market. Municipal bond interest is taxexempt at the federal level and possibly at the state level as well.
Which of the following events would make it more likely that a company would choose to call its outstanding callable bonds. Displaying powerpoint presentation on chapter 2 asset classes and financial instruments money available to view or download. Jul 15, 2015 in this lesson i cover the equity securities market and the types of equity securities that trade within it. Most types of financial instruments provide an efficient flow and transfer of.
Asset classes and financial instruments free download as powerpoint presentation. A company that provides a service or product on credit is said to have an account receivable from that customer. With a zero tax bracket, the aftertax yield for the taxable bond is the same as the beforetax yield 5%, which is greater than. Financial instruments under ifrs 3 introduction accounting for financial instruments under ifrs is complex. Pdf chapter 2 asset classes and financial instruments. Investments lecture 03 financial instruments youtube. Financial instruments chapter 2 major types of securities debt money market instruments bonds common stock.
Mar 29, 2020 financial instruments are assets that can be traded. Chapter 2 asset classes and financial instruments solutions free download as word doc. In the absence of a split, stock c would sell for 110, so the value of the index would be. There is always a possibility that the option will be in. An asset class is a group of securities that exhibits similar characteristics, behaves similarly in the marketplace and is subject to the same laws and regulations. There is always a possibility that the option will be inthemoney at some time prior to. In summer 2007 asset backed cp market collapsed when subprime collateral values fell. An investor buying this security today and holding it until it matures will earn an annual return of 2. Major classes of financial assets or securities debtmoney market instruments.
Life insurers use mortality catastrophe bonds, longterm longevity bonds, and related solutions to hedge risks. Financial advisors view investment vehicles as asset class. When facing higher marginal tax rates, a highincome investor would be more inclined to invest in taxexempt securities. Chapter 02 asset classes and financial instruments 2 3 11. Longterm investors and their asset allocation international. Asset classes and financial instruments solutions to suggested problems 7. The asset allocation decisions of investors are at the core of financial flows. Financial instrument an overview sciencedirect topics. Investments bodie, kane, marcus asset classes money market. Handbook on responsible investment across asset classes. The topics included in the chapter are traditional and alternative asset classes, how asset classes are determined, various types of risk, active versus passive portfolio management, and active versus indexed portfolio construction. Chapter 2 asset classes and financial instruments mortgage association gnma, or ginnie mae, and the federal home loan mortgage corporation fhlmc, or freddie mac. Chapter 2 asset classes and financial instruments 2 3 b. Chapter 2 asset classes and financial instruments 23.
Chapter 02 asset classes and financial instruments multiple choice questions 1. Financial instruments comprise the full range of financial contracts made between institutional units. Chapter 2 asset classes and financial instruments money. Chapter 2 asset classes and financial instruments studocu. Asset classes of financial instruments asset class subproduct mifir identifier bond sovereign bond bond bond other public bond bond bond convertible bond bond bond covered bond bond bond corporate bond bond bond other bonds bond bond exchange traded commodities etc etcs bond exchange traded notes etn etns. In this finance lesson i will go over what the money market short term debt market is and the types of financial instruments that are sold within the money. Calculate the bid price, the ask price and the annualized return from buying and holding the tbill over the next 50 days. The objective of the handbook of financial instruments is to explain. Art 3 an asset which is bought in the form of certificate and entails the buyer for the benefits as a beneficial owner is called a. Start studying chapter 2 asset classes and financial instruments. Chapter two asset classes and financial instruments part i chapter 2 asset classes and financial instruments 29 the money market is a subsector of the fixedincome market. Covers in great detail the topic of financial instruments from bodie, kane, and marcus, the first half of chapter 2. An asset class is a group of similar investment vehicles.