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Reference Guide

Permachart - Marketing Reference Guide: New York Stock Exchange, Nyse American, Market Trend

4 pages1167 viewsFall 2015

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l e a r n r e f e r e n c e r e v i e w
w w w . p e r m a c h a r t s . c o m
Stocks are shares of ownership in a company; they are listed
on one or more stock exchanges
• Investor purchases share(s) and becomes part owner of
• Shareholder can vote for company directors and on major issues
• Shareholder makes money via dividends (direct payments)
from company and selling shares
• Some companies offer dividend reinvestment plans; dividends
automatically purchase more stock
• Stock prices are affected by company news, media coverage
of new products, projected future performance, and economy
• A bond is an IOU, where the buyer lends money to the government
or a corporation
• The loan amount is the principal; the interest paid to the bondholder
is the coupon
• Interest rates are fixed and guaranteed when sold at maturity; they
can be sold before maturity (subject to current interest rates)
• Bond holders receive priority claim to assets of company (compared
to stocks)
Par is the face value of the bond (usually $1,000)
Discount bonds sell below par value; premium bonds sell above par
Registered bonds are registered in the name of the owner; interest
and final redemption are paid automatically
Bearer bonds have attached coupons that must be sent to issuer for
interest to be paid
Secured bonds are supported by company capital (e.g., real estate,
machinery); unsecured (debenture) bonds are backed by the
company’s credit rating
Stocks & Bonds
Stocks & Bonds
Blue Chip Stocks from companies with good
prospects for long-term growth
• Good history of earnings and
• Suitable for conservative investors who
want to earn profits but do not want
high risk
Cyclical React strongly to changes in the business
• Perform well when the economy is
strong and poorly during recession
Defensive Protect shareholder against a
• Not affected by business cycle
Growth Stocks are projected to grow in value
over time
• Value comes from rising earnings and
share price
• Little or no dividends; profits are
Income Pay relatively high dividends
• Provide stockholder with decent income
International Foreign stocks
• Investment is in foreign currency
Over-the-counter Too small to be listed on an exchange
• Traded through brokers
Penny Low-priced stocks
• Usually quoted in cents
Speculative Very risky investments
• Potential for very high return
Common Represent ownership in a company
Stocks • Shareholders are owners in common with other
• All shareholders share in the company’s profits
and losses
• When there are profits, common stock
shareholders benefit most with higher dividends
and capital appreciation
• Shareholders have lower priority than
bondholders, creditors, and preferred
stockholders in cases of bankruptcy or liquidation
Preferred Pay dividends (fixed income) but there is no
Stocks ownership interest
• Stockholders take priority with regards to
dividend payments and claims of company assets
• Purchased for income purposes
• Some types may be converted to common stock
Standard & Poor’s Moody’s Meaning
A+++ Aaa Highest quality
AA+ (AA, AA-) Aa (1,2,3) High quality
A+ (A, A-) A (1,2,3) Upper medium quality
BBB+ (BBB, BBB-) Baa (1,2,3) Medium quality
BB+ (BB, BB-) Ba (1,2,3) Speculative
B+ (B, B-) B (1,2,3) Very speculative
CCC Caa Poor, may be in default
CC Ca Highly speculative
CC Poorest quality
DIn default
Convertible Can be traded for company stock at any time
Corporate Fully taxable
• Reliability depends on issuing company
• Risk ranges from low (investment-grade bonds)
to high (junk bonds, high-yield issues)
Foreign Sensitive to changes in exchange rates (that is,
higher when dollar value increases)
Income Pay interest only if permitted by earnings
Mortgage-backed Mortgage loans that are issued or backed by
government agencies
Municipal Issued by state and local governments
• Free from federal (and state) taxes
Serial Issued from the same body but with different
maturity dates and interest rates
Sinking-fund Funds set by corporation to buy out bonds
U.S. Treasuries Backed by federal government
• Exempt from state and local taxes
• Include Treasury bills (short-term), notes (mid-
term), and bonds (long-term)
Variable Rate Interest rate is tied to other financial instrument
(treasury bill)
Zero Interest Pay interest only at maturity
• Usually sold at discount from par and gains
value from compounded interest
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