are the key differences between common stock‚ preferred stock‚ and corporate bonds? The key differences are that common stock has voting power‚ residual claim‚ and limited liability. Preferred stock on the other hand‚ behaves like a hybrid stock because it has preferred and common dividends‚ but also it behaves like the corporate bonds because it has fixed income and is non-voting characteristics. Finally‚ corporate bonds are instruments of debt that provide fixed income and have non-voting characteristics
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Eric Palomino P.4 12/04/13 Brandon Bond Brandon Bond was born in Perdido Key in Florida‚ USA and is considered as one of the many legends of modern American tattooing. As a student of Fine Arts in Texas Brandon started tattooing in College. Then under Shaman Bear he began his formal apprenticeship. He started working at Tattoo Zoo during College‚ after College he went to Vegas and tattooed on Las Vegas Blvd. Then in New Hampshire he worked with his friend Joe Capobianco. Followed by Slave
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now exchanged for more goods than before‚ and once the currency is weaker‚ less of goods are purchased for the same amount of the currency. Financial institutions use the exchange rates changes to decide whether to buy/sell financial assets such as bonds‚ stocks‚ etc. That means‚ they will buy and sell foreign assets to gain profit. The value of these assets increases or decreases as the exchange rates change. If the dollar is getting stronger‚ for instance‚ then financial institutions are able to
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curves widens as the corporate bond rating decreases. Interest rates: BB>AAA>treasury Yield Curve Other factors that influence interest rate: Fed. Reserve policy‚ Fed. Budget surplus or deficit‚ level of business activity‚ International factors CHAPTER 7: Types: Treasury-government bonds-no default risk‚ Agency - quasi government‚ corporate bonds‚ Municipal bonds‚ foreign bonds Bond Markets primarily traded in the over-the-counter (OTC) market. Most bonds are owned by and traded among
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stocks bonds – Derivatives Prof. Lasse H. Pedersen Use of Financial Instruments Allocation of Capital – Financing of projects Consumption Smoothing: – saving and borrowing Allocation of Risk – Diversification – Hedging – Insurance Meeting place for investors with different (not necessary opposite) investment needs Prof. Lasse H. Pedersen Important Financial Assets Fixed Income Securities – ‘Borrowing instruments’ – Treasury bonds – Municipal bonds – Corporate bonds Equity
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supply-and-demand for bonds framework‚ show why interest rates are procyclical (rising when the economy is expanding and falling during recessions). (MO1.2) Consider the decision to purchase either a 5-year corporate bond or a 5-year municipal bond. The corporate bond is a 12% annual coupon bond with a par value of $1‚000. It is currently yielding 11.5%. The municipal bond has an 8.5% annual coupon and a par value of $1‚000. It is currently yielding 7%. Which of the two bonds would be more beneficial
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Common shareholders have voting rights and may receive dividends. Preferred stock represents nonvoting shares in a corporation‚ usually paying a fixed stream of dividends. While corporate bonds are long-term debt issued by corporations‚ the bonds typically pay semi-annual coupons and return the face value of the bond at maturity. 2. While the DJIA has 30 large corporations in the index‚ it does not represent the overall market nearly as well as the more than 5000 stocks contained in The Wilshire index
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in that failure to make a preferred stock payment does not set trigger corporate bankruptcy. In the event of corporate bankruptcy‚ preferred stock has a higher priority claim to the assets of the firm than common equity but a lower priority than bonds. 2. Why are money market securities sometimes referred to as “cash equivalents”? Money market securities are called “cash equivalents” because of their liquidity and low (zero?) default risk. The prices of money market securities are very stable
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Your wealth falls. Less willing because your wealth falls b. You expect it to appreciate in value. More because its relative expected value increases c. The bond market becomes more liquid. Less because it becomes less liquid relative to bonds d. Prices in the bond market become more volatile. More because it becomes less risky relative to bonds. 2. Explain why you would be more or less willing to buy a house under the following circumstances: a. You just inherited $100‚000. More because your wealth
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on preferred stock e) FV of uneven cash flows f) percentage return on an investment g) portfolio weights h) PV of uneven cash flows i) standard deviation j) taxable equivalent yield on a municipal bond k) the market price of common stock l) the market price of preferred stock m) years until a bond matures n) yield to call o) yield to maturity 3) Define a) firm specific risk b) market risk c) portfolio 4) How is the dollar amount of interest paid to bondholders each year calculated
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