How Risky are You
These are common rating agencies
Moody's, Fitch, S&P
What percentage is a basis point
.01%
The authorized amount of shares issued by a company to investors
Common stock
A financial instrument whose value is derived from an underlying asset
Derivative
Monies paid to use someone else's money. Not the principal, but the ______ earned.
Interest
These investments are rated higher by the rating agencies and are lower risk
Investment Grade
Fixed income instrument sold by cities to raise capital for a project
Municipal bonds
Does not have voting rights, but ranks higher than common stock and is first to receive dividends
Preferred stock
An agreement to repurchase a security after selling it at a higher price
Repo / repurchase agreement
Concept of earning interest on interest
Compound/compounding interest
These investments are rated lower by the rating agencies and yield greater returns
High Yield
Commonly known as the principal and interest generated from a bond
Par value and coupon rate
When a company or individual has the most shares or voting rights in a company
Controlling financial interest
When an institution makes a loan using securities as collateral
Securities based lending
A portion of the companies profits issued to the shareholder on a per share basis
Stock Dividends
*Denotes investors who believe prices will rise in the market and those who believe prices will fall in the market
Bullish and Bearish
Coupon changes for each payment throughout the life of the loan
Floating rate/ variable rate
Shares that a company buys back from the public
Treasury stock
When a company exchanges the value of one asset for another. For example, changing variable income for fixed income
Swaps
Investments that provide regular earnings, such as monthly interest, quarterly dividends or rental payments.
Income Investments
Reducing investment risk by putting money in several different types of investments.
Diversification
Replaced LIBOR
Secured Overnight Financing Rate
An act that changes the price per share of outstanding shares, but not the overall value of an investors holdings
Stock split
Swapping the credit risk of a financial instrument with another investor. Seen in the movie "The Big Short"
CDS
Formula that tells you how long it will take to double your money or what interest you need to earn to double your money.
Rule of 72