© 2006 Pearson Education Canada Inc.Chapter 14 - 1 Chapter 14 Understandin g Banking and Securities.

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Presentation transcript:

© 2006 Pearson Education Canada Inc.Chapter Chapter 14 Understandin g Banking and Securities

© 2006 Pearson Education Canada Inc.Chapter Characteristics of Money Durable Portable Medium of Exchange Medium Measure of Value Measure Store Store Stable Divisible

© 2006 Pearson Education Canada Inc.Chapter Forms of Money Currency Demand Deposits Time Deposits

© 2006 Pearson Education Canada Inc.Chapter Substitutes for Currency and Checks Credit Cards Debit Cards Smart Cards

© 2006 Pearson Education Canada Inc.Chapter Financial Institutions Deposit  Chartered Banks  Trust Companies  Credit unions & Caisses Populaires Nondeposit  Insurance companies  Pension funds  Finance companies  Brokerage firms

© 2006 Pearson Education Canada Inc.Chapter Types of Loans Consumers  Mortgage  Automobile  Home-improvement  Student loan Businesses  Expansion  New equipment  Construction  Line of credit

© 2006 Pearson Education Canada Inc.Chapter Electronic Banking AutomatedTellerElectronic Funds Transfer OnlineBanking

© 2006 Pearson Education Canada Inc.Chapter Bank Safety and Regulation Canadian Deposit Insurance Corporation (CDIC) Bank Act Bank Of Canada

© 2006 Pearson Education Canada Inc.Chapter SecuritiesInvestments StocksStocksBondsBondsMutualFundsMutualFunds

© 2006 Pearson Education Canada Inc.Chapter Stocks: Important Terms 4Authorized stock 4Issued stock 4Unissued stock 4Stock split 4Par value

© 2006 Pearson Education Canada Inc.Chapter LiquidityDividends Voting Rights LimitedLiability CommonStock

© 2006 Pearson Education Canada Inc.Chapter Preferred Stock Convertible Convertible Cumulative Cumulative

© 2006 Pearson Education Canada Inc.Chapter SecuredBonds Debentures ConvertibleBonds CorporateBonds

© 2006 Pearson Education Canada Inc.Chapter Corporate Bond Ratings InterpretationMoody’sS&PInterpretation Highest ratingAaaAAAPrime quality Very strong capacity to payAaAAHigh grade Highest ratingAaaAAAPrime quality Strong capacity to pay; somewhat susceptible to changing business conditions AAUpper-medium grade Very strong capacity to payAaAAHigh grade More susceptible than A rated bonds BaaBBBMedium grade Strong capacity to pay; somewhat susceptible to changing business conditions AAUpper-medium grade Somewhat speculativeBaBBSomewhat speculative More susceptible than A rated bonds BaaBBBMedium grade SpeculativeBB Somewhat speculativeBaBBSomewhat speculative Vulnerable to nonpaymentCaaCCCPoor standing;may be in default SpeculativeBB Highly vulnerable to nonpayment CaCCHighly speculative; often in default Vulnerable to non-paymentCaaCCCPoor standing; may be in default Bankruptcy petition filed or similar action taken CC Lowest rated; extremely poor chance of ever attaining real investment standing Highly vulnerable to nonpayment CaCCHighly speculative; often in default

© 2006 Pearson Education Canada Inc.Chapter Canadian Government Securities Bonds Canadian Savings Bonds Treasury Bills Provincial Bonds Municipal Bonds

© 2006 Pearson Education Canada Inc.Chapter Mutual Funds: Important Terms Load Fund No-Load Fund Open-EndFundOpen-EndFundClosed-EndFundClosed-EndFund

© 2006 Pearson Education Canada Inc.Chapter Types of Mutual Funds 4Money market 4Growth 4Balanced 4Income 4Global 4International 4Index

© 2006 Pearson Education Canada Inc.Chapter Securities Market SecondarySecondarySecuritiesExchangesSecuritiesExchangesPrimaryPrimaryPublicOfferingsPublicOfferings

© 2006 Pearson Education Canada Inc.Chapter Securities Exchanges Over-The-CounterMarket National Association of Securities Dealers (NASDAQ) Trading Floor New York Stock Exchange(NYSE)

© 2006 Pearson Education Canada Inc.Chapter Buying and Selling Securities Exchange Floor Auction Exchange (NYSE) Dealer Exchange (NASDAQ) ElectronicCommunication Networks (ECNs) Stock Specialist Computer Market Maker Computer Broker

© 2006 Pearson Education Canada Inc.Chapter Orders to Buy and Sell Securities Market Order Limit Order Day Order Margin Trading Stop Order Open Order Discretionary Order Short Selling

© 2006 Pearson Education Canada Inc.Chapter Rising Stock Market Falling Stock Market Analyzing Financial News

© 2006 Pearson Education Canada Inc.Chapter Watching Market Indexes and Averages Dow Jones Industrial Average (DJIA) S&P/TSX Composite Index NASDAQ Composite Index Nikkei 225 Index FTSE-100 Index

© 2006 Pearson Education Canada Inc.Chapter Interpreting Financial News Stock Exchange Reports Bond Quotation Tables Mutual Fund Quotations

© 2006 Pearson Education Canada Inc.Chapter Industry Challenges Electronic Trading Round-the-ClockTrading Online Trading

© 2006 Pearson Education Canada Inc.Chapter Regulation of the Securities Market FilingRequirements Fair Disclosure Regulations Securities Fraud