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AFF 704 Chapter Notes - Chapter 5: Market Timing, Canadian Securities Administrators, Shadow Banking System

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School
Ryerson University
Department
Finance
Course
AFF 704
Professor
Hamid Arian

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Document Summary

Chapter 5: fund fi whose primary purpose is to acquire and manage financial assets (e. g. bonds, shares, money market securities) or its owners. Mutual fund: fi that pools financial resources of individuals and companies and invests in diversified portfolios of assets, targeting a specific level of risk. Hedge fund: fi that pools financial resources of sophisticated investors and invests in a diversified pool of assets, usually high risk. Different types of mutual funds: long-term funds include: Bond funds: funds that contain fixed income capital market debt securities with maturity over one year. Equity funds: fund that contain primarily common stock securities. Balanced funds: funds that contain bonds and stock (common and preferred) securities: short-term funds include: Money market mutual funds that are invested in short term paper, usually with maturities of less than 6 months: long-term funds dominate, with short-term money market funds making up only 14% of total assets.

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Related Questions

Many businesses find it generally more efficient to enlist the services of a financial institution when it comes time to raise capital: IE. Investment Banks: An organization that underwrites and distributes new investment securities and helps business obtain financing. Commercial Banks: The traditional department store type of financing serving a variety of savers and borrowers. Financial Service Corporations: A firm that offers a wide range of financial services, including investment banking, brokerage operations, insurance, and commercial banking. Credit Unions: Cooperative association whose members have a common bond such as employees of the same firm. Pension Funds: Retirement plans funded by corporations or government agencies. Life Insurance Companies: Take annual premium payments and invest these funds in stocks, bonds, or real estate and make payments to beneficiaries of the insured parties. Mutual Funds: Corporations that accept money from savers and then use these funds to buy stocks, long-term bonds, or short-term debt issued by business or government. They typically pool funds to reduce risk by diversification. Exchange Traded Funds (ETFs): Buy a portfolio of stocks of a certain type of business sector. IE. media companies, oil companies, Chinese companies, etc. and then sell their own shares to the public. Hedge Funds: Not regulated by the Securities and Exchange Commission (SEC). Typically have large minimum investments of over $1 million and marketed to individuals an institutions with high net worth. Private Equity Companies: Target, buy, and then manage entire firms. Most of the money used to buy these companies is borrowed. Why are the various financial instruments considered claims against a company's future cash flows ?