1. Capital market Instrument: Treasury note and bonds. Federal agency debt. Municipal bonds Corporate bonds Common stock

2. Treasury notes and bonds This is a form of Govt borrowing.. T-note maturities up to 10 years. Where as bonds are issued with maturities ranging from 10 to 30 years. Both are issued in denominations of 1000 or more. Both of them make semi annual coupon payments that enables The Govt to sell the securities at or near par value. Beside their differing maturities at issuance, the major distinction Between T-note and T-Bonds that T-Bonds may be callable during A given period, usually the last five years of the bond’s life. The call provision gives the right to repurchase the bond at par value

3. Federal Agency debt Some Govt agencies issue their own securities to finance their activities. These agencies usually are formed to channel Credit to a particular sector of the economy that the Govt believes that might not receive adequate credit through normal private sources Although the debt of federally sponsored agencies is not Explicitly insured by the federal Govt, it is widely assumed that Govt would step up if an agency neared default. Thus these assets are considered extremely safe.

4. Municipal bonds: Municipal bonds are issued by estate and local Governments. They are similar to treasury and corporate bonds except that Their interest income is exempt from federal income taxation. Capital gain taxes,however must be paid on these bonds, when the matures or if they are sold for more than the investor’s purchase price Two types of municipal bonds can be distinguished. These are General obligation bonds, which are backed by the “full faith and Credit” of the issuer. Another form is revenue bonds, which are issued to finance particular projects and are backed by either by the revenues

5. Municipal bonds  From that project or by the particular municipal agency operating the project.  Typical issuers of revenue bonds are airports, hospital or port authorities.  Obviously revenue bonds are riskier in terms of default than are general obligation bonds. The key feature of the Municipal bonds is their tax exempt status. The investor’s are willing to accept lower yields

6. Corporate Bonds: Corporate bonds enable the private firms to borrow money These bonds are similar in structure to treasury issue-they typically pay semi annual coupon over their lives and return Face value to the bond holder at maturity. They differ most importantly from treasury Bonds in degree of risk. Default risk is a real consideration in the purchase of corporate bonds. The bonds have specific collateral backing them in the event of firm bankruptcy. Unsecured bonds are called debentures, which have no collateral

7. Corporate Bonds Corporate bonds usually come with options attached. Callable bonds give the firm the option to repurchase their Bond from the holder at a stipulated call price. Convertible bonds give the holder the option to convert each Bond into stipulated number of shares

8. Mortgage and Mortgage backed securities

9. Common Stock Common stocks are also known as equity securities or Equities, represents ownership shares in a corporations. Each share of common stock entitles its owner to one vote on any matters of corporate governance that are put to vote at the corporation’s annual general Meeting. Corporations are controlled by a board of directors elected by Share holders.The Board, which meets only a few times each year, selects manager who actually run The corporations on day to day basis. Managers have the authority to make most decisions without the Boards specific approval. The Boards mandate is to oversee the management to ensure that it acts in the best interest of shareholders

10. Common stock: The members of the board are elected in the annual meeting. Shareholders who do not attend the annual meeting can vote by proxy empowering another party to vote in their name. Two most important characteristics of the common stock Is residual claim and limited liability feature Residual claim means in liquidation the shareholders have a claim to what is left over after all other claimants such As tax, employees, suppliers, bondholders and other creditors have been paid. For a firm not in liquidation, share holders have claim to the part Of operating income left over after tax and interest have been paid. Limited liability means most shareholders can lose in the event Of failure of the corporations is their original investment.