BUS 422 Lecture Notes - Lecture 2: Money Market, Cash Flow, Time Horizon
31 Jan 2019
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Document Summary
Investment- commitment of current resources in the expectation of deriving greater resources in the future. Real assets- assets used to produce goods and services. Financial assets- claims on real assets or the income generated by them. Fixed income (debt) securities- pay a specified cash flow over a specific period. Derivative securities- securities providing payoffs that depend on the values of other assets. Asset allocation- allocation of an investment portfolio across broad asset classes. Security selection- choice of specific securities within each asset class. Security analysis- analysis of the value of securities. Risk-return trade-off- assets with higher expected returns entail greater risk. Passive management- buying and holding a diversified portfolio without attempting to identify mispriced securities. Active management- attempting to identify mispriced securities or to forecast broad market trends. Financial intermediaries- institutions that connect borrowers and lenders by accepting funds from lenders and loaning funds to borrowers. An investment company may manage several mutual funds.
