****** 19-1 Functions of Securities Markets Long-Term Funding for Businesses Place to Buy/Sell Securities (Investments)

****** 19-2 Capital Markets Primary Markets (IPO's)Primary Markets (IPO's) Secondary MarketsSecondary Markets

****** 19-3 Investment Banker Assist Sale/Issue of New SecuritiesAssist Sale/Issue of New Securities Underwrite issuesUnderwrite issues Sells to Institutional InvestorsSells to Institutional Investors

****** 19-4 Coupon/Interest RateCoupon/Interest Rate Denomination ($1,000)Denomination ($1,000) PrincipalPrincipal Maturity DateMaturity Date ClassesClasses Unsecured/DebentureUnsecured/Debenture SecuredSecured Bond Market

****** 19-5 Bonds Advantages No VoteNo Vote Interest is Tax- DeductibleInterest is Tax- Deductible Temporary Source of FundsTemporary Source of Funds Can be repaid before maturity with call provisionCan be repaid before maturity with call provision Disadvantages Increase DebtIncrease Debt Legal Obligation to Pay InterestLegal Obligation to Pay Interest Repaid on Maturity DateRepaid on Maturity Date

****** 19-6 Special Bond Features Sinking FundSinking Fund CallableCallable ConvertibleConvertible

****** 19-7 Equity Financing Preferred or Common Investment never has to be repaid Not legally obligated to pay dividends Debt Financing Secured or Debenture Must be repaid on maturity date Interest must be paid whenever specified Debt vs. Equity Financing

****** 19-8 What is Stock? OwnershipOwnership CertificateCertificate Par ValuePar Value DividendsDividends Common vs. PreferredCommon vs. Preferred

****** 19-9 Stock Advantages No RepaymentNo Repayment No Legal ObligationNo Legal Obligation Does Not Create DebtDoes Not Create DebtDisadvantages Voting RightsVoting Rights Dividends not Tax- DeductibleDividends not Tax- Deductible Management Works to Keep Stockholders HappyManagement Works to Keep Stockholders Happy

****** Organized Securities Exchanges New York Stock Exchange (NYSE)New York Stock Exchange (NYSE) American Stock Exchange (AMEX)American Stock Exchange (AMEX) Over-the-Counter (OTC) Over-the-Counter (OTC) NASDAQNASDAQ

****** Investment Criteria RiskRisk YieldYield DurationDuration LiquidityLiquidity Tax ConsequencesTax Consequences

****** Investing in Stock Growth vs. IncomeGrowth vs. Income Capital Gain vs. DividendCapital Gain vs. Dividend Blue Chip vs. PennyBlue Chip vs. Penny Market OrderMarket Order Limit OrderLimit Order Stock SplitStock Split

****** How Stock Splits Work 100 shares of ABC stock selling at $ $ $45 2 for 1 Stock Split Declared 2 for 1 Stock Split Declared Lower Price increases Demand Increased demand increases price How Much Profit Has Been Made?

****** Mutual Funds Pool Investors’ MoneyPool Investors’ Money Best for Small InvestorsBest for Small Investors Index FundIndex Fund DiversificationDiversification No-Load vs. LoadNo-Load vs. Load Open-End vs. Closed-EndOpen-End vs. Closed-End

****** Types of Investments Traditional Stocks/BondsStocks/Bonds Gov’t Securities/CDsGov’t Securities/CDs Money Market or Mutual FundsMoney Market or Mutual Funds Real EstateReal Estate High-Risk Stock on MarginStock on Margin Junk BondsJunk Bonds CommoditiesCommodities

****** Components for Optimal Portfolio Performance Diversification Diversification Timelines Timelines Safety & Risk Safety & Risk Income & Total Return Income & Total Return

****** How does Buying Stock on Margin work? Step 1 An investor wishes to buy 100 shares at $100 per share Step 2 However, the investor has only $4,000 available to invest Step 3 The investor finds he is able to buy the stock with a 40% margin Step 4 The investor puts up $4,000 and borrows $6,000 from the broker

****** Measures of Investment Stock QuotationsStock Quotations Bond QuotationsBond Quotations Mutual Fund QuotationsMutual Fund Quotations

****** Stock Quotes % Change in YTD Price% Change in YTD Price High/Low PriceHigh/Low Price Company Name & Stock SymbolCompany Name & Stock Symbol Last Dividend Per ShareLast Dividend Per Share Dividend YieldDividend Yield P/E RatioP/E Ratio # of Shares Traded# of Shares Traded Closing PriceClosing Price Net Change- PriceNet Change- Price

****** Mutual Fund Quotations Fund NameFund Name Net Asset Value (NAV)Net Asset Value (NAV) Net Change in NAVNet Change in NAV YTD ReturnYTD Return Long-Term ReturnLong-Term Return