Various industries are so different that no common factors exist among them for
purposes of analysis.
Countries are divided into developed and emerging markets based on the market
capitalization of their stock market.
A breadth of the market indicator attempts to measure what a broad range of securities
is doing as opposed to merely examining a market average.
The investment banker acts as a middleman in the process of raising new funds for
corporations and state and local governments.
Securities must be kept in the street name of the brokerage if a margin account is used.
A bond quote of 91 7/8 on a $1,000 par value bond means the bond is trading at
$918.75.
A zero-coupon bond has a duration equal to its maturity.
The basic premise behind interest rate swaps is that one party is able to trade one type
of risk exposure for another.
In a declining market, stock index futures can be used to hedge a stock portfolio to help
offset losses in the portfolio.
Rotational investing is defined as the process by which investors rotate out of losing
stocks and into new stocks.
The Beaver and Altman bankruptcy studies indicated that ratios of failing firms signal
failure as much as five years ahead of bankruptcy.
The term basis represents the difference between the stock index futures price and the
value of the underlying index.
The market capitalization of the 20 largest U.S. companies would rank ahead of any
emerging market’s capitalization, including China by 2009.
At the peak of the stock market bubble in 1999, the value of the developed world’s
stock market was $33 trillion. By 2002, the value had declined to less than $21 trillion.
By year-end 2005, after several years of worldwide economic growth, the developed
markets reached $36.5 trillion.
It is estimated that manufacturing accounts for about than 20% of the GDP.
The main advantage of international investment is that foreign markets may be
negatively correlated with U.S. and other foreign markets.
Generally, the higher the beta, the greater the speculative premium.
A drop in interest rates causes proportionally greater gains than increases in rates will
cause losses.
In the bull market of the 1990s, many firms repurchasing their own shares were among
the strongest and most respected companies on Wall Street.
It is generally thought that young, upwardly mobile people should take less risk than
elderly people living on a fixed income.
An important feature of the GNMA (GinnieMae) pass-through certificate is that there is
no principal balance at maturity.
Some investors are prohibited by law from participating in the futures market.
The currency crisis in South Asia caused a big decrease in the value of South Asian
countries’ market values between 1996 and 2002.
Immunization protects the portfolio value against upward movement in interest rates
but not downward movement in interest rates.