CHAPTER 13: INVESTMENT OPTIONS AND AVOIDING INVESTMENT SCAMS

• ORDINARY SHARE

  Represents ownership interest in issuing corporations.
• CLASS A Non Voting ordinary share Entitled to receive dividends.
• CLASS B Voting ordinary shares not receive dividends.
• PREFERRED SHARES

  Usually motivating but has ordinary shares in dividend and liquidation rights.
• SHORT-TERM DEBT SECURITIES

  Obligations that mature in one year or less.
• NEGOTIABLE CERTIFICATES OF DEPOSITS

  Issued by authorized commercial banks.
• B. COMMERCIAL PAPERS

  Promissory negotiable notes issued by large, well known corporations.
• C. BANKER’S ACCEPTANCE

  Used by importers to secure trade credit from exporters. The accepting bank guarantees payment by borrowers.
• D. TREASURY BILLS

  Obligations issued by the government treasury sold at a discount from face value.
• INTERMEDIATE AND LONG-TERM DEBT SECURITIES

  Obligations that mature in more than one year.
• TREASURY NOTES

  Issued by government treasury with maturities between 1 and 10 years; sold at face value with a specified interest payment.
• TREASURY BONDS

  Government treasury securities with maturities over 10 years.
• B. CORPORATE BONDS

  Debt obligations issued by corporations. Many types of corporate bonds exist; they differ in the way the principal and interest payments are made and in the collateral used to back the bonds.
• DERIVATIVE SECURITIES

  Securities that derive their value from the value of an underlying asset.
• OPTIONS

  Provide the right to buy or sell shares of ordinary shares of a specific corporation within a limited period of time at a designated price.
• B. COMMODITY FUTURES

  Provide the contract holder the right to sell a specified amount of an agricultural or natural resources commodity at a designated price within a specified period of time.
• C. FINANCIAL FUTURES

  Provide the contract holder the right to sell a specified amount of an ordinary share index, bonds, or foreign currencies at a designated price within a specified period of time.
• D. OPTIONS ON FUTURES

  Provide the right to buy or sell a specified commodity or financial future within a limited period of time at a designated price.
• E. RIGHTS

  Issued by a corporation to existing ordinary shares in connection with the sale of additional shares of shares.
• F. WARRANT

  Issued by a corporation that provides the holder the right or option to purchase additional bonds or ordinary shares from the issuing corporation at a specified price within a designated period of time.
• REAL ASSETS

  Non-financial assets
• PRECIOUS METALS

  Includes gold, silver, copper, etc.
• B. REAL ESTATE

  Includes single- and multifamily residences, undeveloped land, commercial property, and farmland.
• C. COLLECTIBLES

  Includes diamond; fine art, and numismatic coins.
• INTERNATIONAL INVESTMENTS

  Investments by individuals in debt or equity securities issued by organizations outside the country of residence of the investor.
• SHARE IN MULTINATIONAL CORPORATIONS

  Shares and bonds issued by large corporations with significant business interests in more than one country.
• B. FOREIGN SHARES TRADED ON A DOMESTIC AND FOREIGN EXCHANGE

  Shares of large firms that have local exchange established trading for their securities on domestic as well as foreign exchanges
• C. FOREIGN CURRENCIES

  Include dollars, Euros, British pounds, etc.
• IX. CRYPTOCURRENCY

  A form of encrypted digital currency (e.g., bitcoin)
• SHARES

  refer to the ownership in a particular company.
• STOCKS

  describe the ownership of shares in general.
• SHAREHOLDERS

  are investors who purchase the shares the corporations create and who therefore own a part of the company. They receive payouts known as dividends.
• BONDS

  It is a type of debt instrument used by corporations, governments, and other entities to raise capital. When an investor buys a bond they are essentially lending money to the issuer in exchange for periodic interest payments and the return of the bond's face value when it matures.
• DERIVATIVES

  A type of financial instrument, the value of derivatives is based on the price of an underlying asset or index. They are commonly used by investors to spread risk or to speculate.
• CRYPTOCURRENCY

  A form of encrypted digital currency, a cryptocurrency is created, regulated, and kept secure by a network of computers. Bitcoin was the first example of a cryptocurrency, but there are now several thousand types.
• STOCKS

  describe the ownership of shares in general.
• SHAREHOLDERS

  are investors who purchase the shares the corporations create and who therefore own a part of the company. They receive payouts known as dividends.