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

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Presentation on theme: "© 2006 Pearson Education Canada Inc.Chapter 14 - 1 Chapter 14 Understandin g Banking and Securities."— Presentation transcript:

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

2 © 2006 Pearson Education Canada Inc.Chapter 14 - 2 Characteristics of Money Durable Portable Medium of Exchange Medium Measure of Value Measure Store Store Stable Divisible

3 © 2006 Pearson Education Canada Inc.Chapter 14 - 3 Forms of Money Currency Demand Deposits Time Deposits

4 © 2006 Pearson Education Canada Inc.Chapter 14 - 4 Substitutes for Currency and Checks Credit Cards Debit Cards Smart Cards

5 © 2006 Pearson Education Canada Inc.Chapter 14 - 5 Financial Institutions Deposit  Chartered Banks  Trust Companies  Credit unions & Caisses Populaires Nondeposit  Insurance companies  Pension funds  Finance companies  Brokerage firms

6 © 2006 Pearson Education Canada Inc.Chapter 14 - 6 Types of Loans Consumers  Mortgage  Automobile  Home-improvement  Student loan Businesses  Expansion  New equipment  Construction  Line of credit

7 © 2006 Pearson Education Canada Inc.Chapter 14 - 7 Electronic Banking AutomatedTellerElectronic Funds Transfer OnlineBanking

8 © 2006 Pearson Education Canada Inc.Chapter 14 - 8 Bank Safety and Regulation Canadian Deposit Insurance Corporation (CDIC) Bank Act Bank Of Canada

9 © 2006 Pearson Education Canada Inc.Chapter 14 - 9 SecuritiesInvestments StocksStocksBondsBondsMutualFundsMutualFunds

10 © 2006 Pearson Education Canada Inc.Chapter 14 - 10 Stocks: Important Terms 4Authorized stock 4Issued stock 4Unissued stock 4Stock split 4Par value

11 © 2006 Pearson Education Canada Inc.Chapter 14 - 11 LiquidityDividends Voting Rights LimitedLiability CommonStock

12 © 2006 Pearson Education Canada Inc.Chapter 14 - 12 Preferred Stock Convertible Convertible Cumulative Cumulative

13 © 2006 Pearson Education Canada Inc.Chapter 14 - 13 SecuredBonds Debentures ConvertibleBonds CorporateBonds

14 © 2006 Pearson Education Canada Inc.Chapter 14 - 14 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 non- payment CaCCHighly speculative; often in default

15 © 2006 Pearson Education Canada Inc.Chapter 14 - 15 Canadian Government Securities Bonds Canadian Savings Bonds Treasury Bills Provincial Bonds Municipal Bonds

16 © 2006 Pearson Education Canada Inc.Chapter 14 - 16 Mutual Funds: Important Terms Load Fund No-Load Fund Open-EndFundOpen-EndFundClosed-EndFundClosed-EndFund

17 © 2006 Pearson Education Canada Inc.Chapter 14 - 17 Types of Mutual Funds 4Money market 4Growth 4Balanced 4Income 4Global 4International 4Index

18 © 2006 Pearson Education Canada Inc.Chapter 14 - 18 Securities Market SecondarySecondarySecuritiesExchangesSecuritiesExchangesPrimaryPrimaryPublicOfferingsPublicOfferings

19 © 2006 Pearson Education Canada Inc.Chapter 14 - 19 Securities Exchanges Over-The-CounterMarket National Association of Securities Dealers (NASDAQ) Trading Floor New York Stock Exchange(NYSE)

20 © 2006 Pearson Education Canada Inc.Chapter 14 - 20 Buying and Selling Securities Exchange Floor Auction Exchange (NYSE) Dealer Exchange (NASDAQ) ElectronicCommunication Networks (ECNs) Stock Specialist Computer Market Maker Computer Broker

21 © 2006 Pearson Education Canada Inc.Chapter 14 - 21 Orders to Buy and Sell Securities Market Order Limit Order Day Order Margin Trading Stop Order Open Order Discretionary Order Short Selling

22 © 2006 Pearson Education Canada Inc.Chapter 14 - 22 Rising Stock Market Falling Stock Market Analyzing Financial News

23 © 2006 Pearson Education Canada Inc.Chapter 14 - 23 Watching Market Indexes and Averages Dow Jones Industrial Average (DJIA) S&P/TSX Composite Index NASDAQ Composite Index Nikkei 225 Index FTSE-100 Index

24 © 2006 Pearson Education Canada Inc.Chapter 14 - 24 Interpreting Financial News Stock Exchange Reports Bond Quotation Tables Mutual Fund Quotations

25 © 2006 Pearson Education Canada Inc.Chapter 14 - 25 Industry Challenges Electronic Trading Round-the-ClockTrading Online Trading

26 © 2006 Pearson Education Canada Inc.Chapter 14 - 26 Regulation of the Securities Market FilingRequirements Fair Disclosure Regulations Securities Fraud

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