Download
9 01 summarize the various types of short term and long term investments n.
Skip this Video
Loading SlideShow in 5 Seconds..
9.01 Summarize the various types of short-term and long-term investments. PowerPoint Presentation
Download Presentation
9.01 Summarize the various types of short-term and long-term investments.

9.01 Summarize the various types of short-term and long-term investments.

257 Vues Download Presentation
Télécharger la présentation

9.01 Summarize the various types of short-term and long-term investments.

- - - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript

  1. T009-01.01 Savings and Investments 9.01 Summarize the various types of short-term and long-term investments. H3

  2. T009-01.02 Investing • Putting your money to use in order to make money on it. • Simple Interest vs. Compound Interest • Simple – interest that is computed only on the amount saved. • Compound – interest that is computed on the amount saved plus interest previously earned. • Securities refers to bonds, stocks, and other documents sold by corporations and governments to raise large sums of money. H4

  3. T009-01.03 Saving • Savings is money put aside for future use. • Most common reasons to save are: • Major purchases • Emergencies • Saves money for a “rainy day” • Retirement H5

  4. T009-01.04 Investing Through Banks • Savings Account • Simplest form of saving • Offered by all institutions (banks, credit unions, etc.) • Generally, a low minimum deposit is required • Interest is low and varies from institution to institution • Certificate of Deposit • Requires a minimum deposit for a minimum amount of time • Interest rates are higher than a savings account H6

  5. T009-01.05 Investing Through BanksContinued • Money Market Fund • Kind of mutual fund, or pool of money, put into a variety of short-term debt by business and government. H7

  6. T009-02.01 Savings and Investments 9.02 Summarize the investing in stocks and bonds. H17

  7. T009-02.02 Investing in Bonds • Bonds • Promise to pay a definite amount of money at a stated interest rate on a specified maturity date. • Bondholder • Individual who lends money to a corporation. H18

  8. T009-02.03 Bond Terms • Face Value • Amount being borrowed by the seller of the bond. • Coupon Rate • Rate of interest on the bond. H19

  9. T009-02.04 Types of Bonds • Corporate Bonds • Issued by corporations • Used to finance buildings and equipment. • Municipal Bonds • Issued by local and state governments. • Used to finance schools, roads, airports, etc. H20

  10. T009-02.05 Types of Bonds • Treasury Bonds • Issued by federal government. • Known as Savings or Federal Bonds • Types: • Series EE Bonds • Cost half the face value. • After a specified number of years the bond becomes worth the face value. • Treasury Bills • Issued for three months to one year. • Treasury Notes • Issued for two to ten years. • Treasury Bonds • Issued for ten or more years. H21

  11. T009-02.06 Investing in Stocks • Stock • Share of ownership in a business. • Stock Certificate • Proof of ownership in a corporation • Market Value • Price at which a stock can be bought or sold. • Dividends • Part of profits shared with stockholders. H22

  12. T009-02.07 Types of Stocks • Preferred • Priority over common stockholders in the payment of dividends. • No voting rights. • Common • General ownership in a corporation and a right to share in the corporation’s profits • Right to vote at shareholder meetings • One vote per share. H23

  13. T009-02.08 Reading a Stock Quotation Table • 52 Week Hi – Highest price during previous 52 weeks • 52 Week Lo – Lowest price during previous 52 weeks • Stock – Company name abbreviated • Stock Symbol – Ticker symbol • Dividend – Current dividend in dollars per share based on the last dividend paid • Yield – Dividend yield based on the current selling prices per share H24

  14. T009-02.09 Reading a Stock Quotation Table • PE – (Price/Earnings ratio, comparing the price of the stock with earnings per share). • Volume – Number of shares traded. • High – Highest price during the day. • Low – Lowest price during the day. • Close – Closing price for the day. • Net Change – Change in the closing price today compared with closing price on the previous day. H25

  15. T009-02.10 Buying and Selling Stock on NYSE Typical transactions follow these steps: • Floor broker (buyer) goes to the trading post at which time this specific stock is traded. It is traded with the floor broker (seller) who has an order to buy. • Account executive receives your order to sell stock and relays to the brokerage firm’s representative at the stock exchange. • A clerk signals the transaction to a floor broker on the stock exchange floor. H26

  16. T009-02.11 Buying and Selling Stock on NYSE cont. • Floor broker (buyer) signals the transaction back to the clerk. Then a floor reporter – an employee of the exchange – collects the information about the transaction and inputs it into the ticker system. • The sale appears on the price board, and a confirmation is relayed back to your account executive, who then notifies you of the completed transaction. H27

  17. T009-02.12 Brokerage Firm Sells stocks for consumers • Broker • Person who acts as a go between for buyers and sellers of securities. • Commission • Fee charged by a brokerage firm for the buying and/or selling of a security. H28

  18. T009-02.13 Stock Exchanges • Marketplace where brokers who represent investors meet to buy and sell securities. • Examples: • NYSE • NASDAQ • AMEX • Exchanges in San Francisco, Boston, Chicago H29

  19. T009-02.14 Types of Markets • Bull Market • Occurs when investors are optimistic about the economy. • Bear Market • Occurs when investors are pessimistic about the economy. H30

  20. T009-02.15 Numerical Measures for a Corporation • Current Yield • Annual dividend divided by current market value. • Price/Earnings Ratio • Price of one share of stock divided by the earnings per share. H31

  21. T009-02.16 Selling a Stock • Total Return • Calculation that includes the annual dividend as well as any increase or decrease in the original purchase price of the investment. • Capital Gains • Profit from the sale of an asset such as stocks, bonds, or real estate. Taxed as income. • Capital Loss • Sale of an investment for less than its purchase price. Subtract up to $3,000 in losses from your income. H32

  22. T009-03.01 Savings and Investment 9.03 Summarize other types of investments. H48

  23. T009-03.02 Investing Through Insurance • Life Insurance • Cash-value insurance provides both savings and death benefits. H49

  24. T009-03.03 Investing in Your Future • Pension • Series of regular payments made to a retired worker under an organized plan. • Individual Retirement Account (IRA) • Tax sheltered retirement plan in which people can annually invest earnings. • Types: • 401k or 403b contributions are tax deductible and funds are taxed as regular income when they are withdrawn after age 59 ½. • Roth IRA contributions are not tax deductible, but investment gains and all funds on which taxes are prepaid are tax free when they are withdrawn after age 59 ½. H50

  25. T009-03.04 Investing in Your Future • Annuity • Amount of money that an insurance company will pay at definite intervals to a person who has previously deposited money with the company. H51

  26. T009-03.05 Investing Through Other Sources • Real Estate • Land and anything that is attached to it. • Mortgage • Legal document giving the lender a claim against the property. • Home Equity • Difference between the price at which you could currently sell your house and the amount owed on the mortgage. • Appreciation – general increase in value of a property. • Depreciation – general decrease in value of a property. H52

  27. T009-03.06 Investing Through Other Sources • Types of Property • Undeveloped Property (Land) • Unused land intended only for investment purposes. • Commercial Property • Land and buildings that produce lease or rental income. • Real Estate Investment Trusts (REITs) • Works like a mutual fund. • Combines funds to invest in real estate. H53

  28. T009-03.07 Collectibles • Items of personal interest to collectors. • Rare coins, works of art, antiques, stamps, rare books, comic books, sports memorabilia, rugs, ceramics, paintings, and other items that appeal to collector and investors. H54

  29. T009-03.08 Commodities • Include grain, livestock, precious metals, currency, and financial instruments. • Futures • Commodity contract purchased in anticipation of higher market prices for the commodity in the near future. H55

  30. T009-03.09 Investing With Others • Investment Clubs • Small group of people who organize to study stocks and to invest their money. • Mutual Fund • Created by an investment company that raises money from many shareholders and invests it in a variety of stocks. • Limit risk by diversifying investment. H56

  31. T009-03.10 Speculative Investment • Speculator • One that has an unusually high risk. H57

  32. T009-04.01 Savings and Investments 9.04 Analyze the factors that affect the rate of return on a given savings or investment plan and calculate the rate of return. H65

  33. T009-04.02 Savings Plan • Putting money aside in a systematic order. • Ways to put money aside: • Regular deposit • Automatic deposit • Electronic funds transfer H66

  34. T009-04.03 Starting a Program • Factors determining a program • Safety • Assurance that the money you have invested will be returned to you. • Liquidity • Ease with which an investment can be changed into cash without losing any of its value. • Yield • Rate of return (percentage of interest that will be added to you r savings over a period of time). • Diversification • Process of spreading your assets among several different types of investments to lessen risk. H67

  35. T009-04.04 Factors That Affect the Rate of Return on an Investment • Risk - Chance of loss. • Rate of Return (yield) • Amount of money the investment earns. • Compounding frequency is the interest computed on the amount saved plus the interest previously earned. • Liquidity • Ease with which an investment can be changed into cash. • Resistance to inflation • Will rate of return keep up with inflation? • Tax considerations H68

  36. T009-04.05 Factors that Affect the Selection of Financial Institutions • Services offered • Business hours • Location • On line services H69

  37. T009-04.06 Financial Security Investments(low risk) • Cash • Savings Accounts • Money Market Accounts • Certificate of Deposit • US Government Bonds • Retirement Accounts H70

  38. T009-04.07 Safety and Income Investments • US Treasury Securities • Conservative Corporate Bonds • State and Municipal Bonds • Income and Utility Stocks H71

  39. T009-04.08 Growth Investments • Income and Growth Stocks • Mutual Funds • Real Estate • Convertible Bonds H72

  40. T009-04.09 Speculation Investments(high risk) • Options • Commodities • Precious Metals and Gems • Speculative Stocks • Junk Bonds • Collectibles H73

  41. T009-04.10 Calculating Rate of Return • Rate of Return = Total Interest Earned divide by Original Deposit • Example: • If you deposited $100 in account that paid $6.18 interest for one year. What is the rate of return? • $6.18/$100 = .0618 = 6.18% H74

  42. T009-05.01 Savings and Investments 9.05 Analyze how saving and investing influences economic growth. H85

  43. T009-05.02 Savings and Economic Growth • Individual savings allow: • Businesses to expand and create more jobs. • Demand for goods and services to increase. • Failure to save will cause less money to be invested and the economy may slow as a result. • Savings contribute to our economic stability • Government uses savings to build highways, schools, and public services H86

  44. T009-06.01 Savings and Investments 9.06 Describe wills and other legal documents. H89

  45. T009-06.02 Wills • Legal document that specifies how you want your property to be distributed after your death. • Intestate • Die without a legal will • State will step in and control the distribution of your estate. • Probate • Legal procedure of proving a will to be valid or invalid. H90

  46. T009-06.03 Wills • Simple Will • Leaves everything to your spouse • Formal Will • Prepared by an attorney. • Holographic Will • Handwritten will that you prepare yourself • Needs to be written, dated, and signed entirely in your own handwriting. H91

  47. T009-06.04 Other Legal Documents • Trusts • Legal arrangement that helps manage the assets of your estate for you benefit or that of your beneficiaries. • Living Will • Document in which you state whether you want to be kept alive by artificial means if you become terminally ill and unable to make such a decision. • Power of Attorney • Legal document that authorizes someone to act on your behalf. H92

  48. T009-06.05 GuardianPerson who accepts the responsibility of: 1. Providing children with personal care after their parents’ death 2. Managing the parents’ estate for the children until they reach a certain age H93

  49. T009-07.01 Savings and Investments 9.07 Explain how agencies regulate financial markets and protect investors. H98

  50. T009-07.02 Regulators • Securities and Exchange Commission (www.sec.gov) • Protect investors and maintain the integrity of the securities markets. H99