INTEGRALS
The option to buy an underlying stock
Call Option
The place to raise public money
Capital Markets
Debt
Bonds
High Inflation Means Low...
Unemployment
Floating stocks to the public for the first time
Initial Public Offering (IPO)
You scratch my back, and I scratch yours... I pay yours, and you pay mine in private. It is very risky...
Swaps
The value of money changes over time
Time Value of Money
Stock
Equity
The four sectors of a country's GDP
Consumers (C) + Corporate Investments (I) + Government Expenditures (G) + Exports - Imports (NX)
Goal of the corporation is to...
Maximize Shareholder Wealth
The family of investment vehicles that includes swaps, forwards, futures, and options
Derivatives
Taking money from the present to the future
Compounding
Safest investment in this country with little to zero risk
Treasury Bills, Notes, and Bonds
The two economic policies (Central Bank vs. Executive/Legislative Branch)
Monetary Policy and Fiscal Policy
Amortization
Fixed amount, tradable, prespecified price today for delivery in the future, great for hedging risks
Futures
Taking money from the future to the past
Discounting
Riskier than corporate bonds but less risky than common stocks
Preferred Stocks
A Eurobond has this additional risk than a domestic bond
Foreign Exchange Exposure
EBITDA
Earnings Before Interest, Taxes, Depreciation and Amortization
Any custom amount you want, any time you want, you name it... Decide now, pay for it, and foreign exchange risk is no longer an issue...
Forward Contracts
Same payment amount every single time
Annuity
Low to high: stocks, bonds, municipals, options
Municipals, Bonds, Stocks, Options
Mismatched exchange rates will eventually return to equilibrium (very quickly) via...
Arbitrage
Low priced stocks (e.g., stocks under $1) are called...
Penny Stocks