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Chapter 19 - Using Securities Markets for Financing and Investing Opportunities
19-21
progress
assessment
(Text page 529)
PPT 19-18
Progress Assessment
(See complete PowerPoint slide notes on page 19.64.)
Chapter 19 - Using Securities Markets for Financing and Investing Opportunities
learning goal 4
Compare the advantages and disadvantages of obtaining debt financing by issuing
1. The PRINCIPAL is the face value of a bond.
3. INTEREST is the payment the issuer of the
bond makes to the bondholders to pay for use
the bond’s COUPON RATE, a term from when
bonds were issued as bearer bonds.
PPT 19-19
Learning the Language of Bonds
(See complete PowerPoint slide notes on page 19.64.)
TEXT FIGURE 19.2
Types of Government
Securities That Compete with
Corporate Bonds
(Text page 530)
This text figure lists and describes several types of govern-
ment bonds that compete in securities markets with corporate
bonds.
bond issue, it cannot be changed.
5. Bonds are also rated in terms of their RISK by
independent firms such as Standard & Poor’s
and Moody’s Investor Services.
unsecured (i.e., not backed by any collat-
eral such as equipment).
b. Debenture bonds are issued only by well-
Chapter 19 - Using Securities Markets for Financing and Investing Opportunities
PPT 19-20
Advantages of Issuing Bonds
(See complete PowerPoint slide notes on page 19.64.)
PPT 19-21
Disadvantages of Issuing Bonds
(See complete PowerPoint slide notes on page 19.65.)
TEXT FIGURE 19.3
Bond Ratings: Moody’s Investors
Service, Standard & Poor’s Investor
Service, and Fitch Ratings
(Text page 531)
PPT 19-22
Bond Ratings
(See complete PowerPoint slide notes on page 19.65.)
PPT 19-23
Different Classes of Corporate
Bonds
(See complete PowerPoint slide notes on page 19.65.)
Chapter 19 - Using Securities Markets for Financing and Investing Opportunities
2. SECURED BONDS (sometimes called MORT-
GAGE BONDS) are backed by some tangible
E. SPECIAL BOND FEATURES
1. Companies often establish a RESERVE AC-
a. A SINKING FUND is a reserve account in
Chapter 19 - Using Securities Markets for Financing and Investing Opportunities
PPT 19-24
Special Features in Bond Issues
(See complete PowerPoint slide notes on page 19.66.)
Chapter 19 - Using Securities Markets for Financing and Investing Opportunities
a. A CONVERTIBLE BOND is one that can be
converted into shares of common stock in
market intermediary to buy and sell securi-
Chapter 19 - Using Securities Markets for Financing and Investing Opportunities
19-29
progress
assessment
(Text page 532)
PPT 19-25
Progress Assessment
(See complete PowerPoint slide notes on page 19.66.)
PPT 19-26
Buying Securities
(See complete PowerPoint slide notes on page 19.66.)
MAKING
ethical
decisions
(Text page 533)
PPT 19-27
Money Going
Up in Smoke
(See complete PowerPoint slide notes on page 19.67.)
19-30
B. INVESTING THROUGH ONLINE BROKERS
1. Investors can use ONLINE TRADING SER-
VICES to buy and sell stocks and bonds instead
of using traditional broker services.
analyze such factors as desired income, cash
GY
Chapter 19 - Using Securities Markets for Financing and Investing Opportunities
critical thinking
exercise 19-2
PLAYING THE STOCK MARKET
This exercise explores the effect of the stock market ups and
downs on an investor. (See complete exercise on page 19.87 of
this manual.)
bonus case 19-2
INVESTING AN INHERITANCE
This case explores the investment choices available to an in-
dividual with a $30,000 inheritance to invest. (See the complete
case, discussion questions, and suggested answers beginning on
page 19.93 of this manual.)
Chapter 19 - Using Securities Markets for Financing and Investing Opportunities
cluding steady return and additional income.
vestment and its entire yield will be worth
sistent dividends)
1. DIVERSIFICATION means buying several differ-
PPT 19-28
Five Investment Criteria
(See complete PowerPoint slide notes on page 19.67.)
PPT 19-29
Investing 101
(See complete PowerPoint slide notes on page 19.67.)
PPT 19-30
Average Annual Return of Asset
Classes (Since 1926)
(See complete PowerPoint slide notes on page 19.68.)
PPT 19-31
Diversification
(See complete PowerPoint slide notes on page 19.68.)
lecture link 19-5
THE DOMINICAN NUNS’ STOCK
PORTFOLIO
The Adrian Dominican Sisters use their standing as stock-
holders and moral authority as nuns to try to shape policy at
some of America’s biggest corporations. (See complete lecture
link on page 19.82 of this manual.)
REACHING BEYOND
our borders
(Text page 534
PPT 19-32
The Sun Never
Sets on Stock
(See complete PowerPoint slide notes on page 19.68.)
19-34
of investing.
2. By diversifying, investors decrease the chance
of losing everything they have invested.
PORTFOLIO STRATEGY or ALLOCATION
2. Stock investors are identified by their percep-
PPT 19-33
Primary Investment Services
Consumers Need
(See complete PowerPoint slide notes on page 19.69.)
progress
assessment
(Text page 535)
PPT 19-34
Progress Assessment
(See complete PowerPoint slide notes on page 19.69.)
PPT 19-35
Perceptions of the Market
(See complete PowerPoint slide notes on page 19.70.)
PPT 19-36
Bear Market Declines in
the S&P 500
(See complete PowerPoint slide notes on page 19.70.)
PPT 19-37
Selecting Stocks
(See complete PowerPoint slide notes on page 19.70.)
Chapter 19 - Using Securities Markets for Financing and Investing Opportunities
a. CAPITAL GAINS are the positive difference
4. INVESTMENT OPPORTUNITIES IN STOCK
a. BLUE CHIP STOCKS are stocks of high-
quality companies that pay regular dividends
and generally experience consistent growth
in the company’s stock price.
broker to buy stock immediately at the best
price available.
b. LIMIT ORDERS tell a broker to buy or sell a
Chapter 19 - Using Securities Markets for Financing and Investing Opportunities
19-37
19-38
B. STOCK SPLITS
1. Companies and brokers prefer to sell stock in
ROUND LOTS, purchases of 100 shares at a
LOTS (less than 100 shares at a time).
2. A STOCK SPLIT is an action by a company that
3. There is no change in the firm’s ownership struc-
ture and no change in the investment’s value af-
price increases demand for the stock.
1. BUYING STOCK ON MARGIN is purchasing
from the brokerage firm.
2. MARGIN is the amount of money (as a percent-
cussed in detail in Chapter 20).
3. However, investors must repay the credit ex-
any losses.
5. If the investor is unable to make the margin call,
PPT 19-38
Stock Splits
(See complete PowerPoint slide notes on page 19.70.)
PPT 19-39
Buying Stock on Margin
(See complete PowerPoint slide notes on page 19.71.)
19-40
D. UNDERSTANDING STOCK QUOTATIONS
1. The Wall Street Journal lists stock quotations
NASDAQ.
2. Figure 19.4 shows an example of an online
stock quotation.
a. The HIGHEST and LOWEST PRICE the
stock has sold for over the past 52 weeks
b. The last DIVIDEND PER SHARE paid
