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JOB MARKET ADVICE FOR MY STUDENTS University of New Orleans Tulane University Securities Business & Brokerage Firms Economic Analysis, Industry Analysis, Company Analysis How to set personal and professional goals.
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i. Diversification ii. Professional Supervision iii. Switching Privileges iv. Small Amount of Investment
i. Lipper Analytical Services ii. Morningstar iii. Forbes Magazine iv. Money Magazine
i. The Bond Contract. Fixed Rate of Return, Fixed Term, Fixed Par ii. Par Value iii. Coupon Rate iv. Maturity Date v. Indenture vi. Bond Price quotes in financial/investment sources vii. Call Provisions 1. Non Callable 2. Deferred Call 3. Fully Callable viii. Inverse Relationship between Bond prices and Interest Rates ix. Put Provision x. Debenture xi. Sinking Fund Provision xii. Bond Valuation xiii. Bond Yields 1. Coupon Yield 2. Current Yield 3. Yield-to-Maturity 4. Yield-to-Call xiv. Bond Ratings 1. Standard & Poors Corporation 2. Moody’s 3. Investment Grade Bonds 4. Speculative Grade Bonds xv. Zero Coupon Bonds
i. Treasury Bills 1. Par Value 2. 3-12 month term. Short Term Issue. 3. Sold at a discount from par ii. Treasury Notes 1. 2-10 year term. Intermediate Term. 2. Par Value iii. Treasury Bonds 1. 10-30 year term. Long Term. 2. Par Value iv. Strips – US Treasury Zero Coupon Bonds v. Liquidity of the Treasury securities market. vi. Quotations on Treasury securities in the Wall Street Journal
i. Pass-Through Securities ii. Securitization iii. GNMA - Government National Mortgage Assn. (Ginnie Mae) iv. FNMA – Federal National Mortgage Assn. (Fannie Mae) v. SLMA – Student Loan Marketing Assn. (Sallie Mae)
i. Tax Exempt Securities ii. Creatures of Tax Policy iii. General Obligation iv. Revenue Bonds v. Tax Equivalent Yield
i. Expectations Hypothesis ii. Liquidity Preference Theory iii. Market Segmentation Theory
i. Money Supply ii. Interest Rates
i. Discount Rate (is an interest rate) 1. Money Rates Column in the Wall Street Journal. ii. Reserve Requirements ($ to be held on deposit at the Fed) iii. Open Market Operations (OMO)
i. Economic Analysis & the Business Cycle 1. Federal Government Economic Policy a. Stable Prices (low inflation) b. Business Stability at high levels of production (low unemployment) c. Sustained Real growth in GDP (actual growth after inflation) d. A balance in international payments 2. Fiscal Policy a. Controlled and administered by Congress b. Tax & Spend c. Deficit d. Surplus 3. Monetary Policy a. Controlled and administered by the Federal Reserve System b. Money Supply and Interest Rates 4. Economic Indicators a. Leading Indicators i. Workweek ii. Unemployment Claims iii. Orders for Consumer Goods iv. Slower Deliveries v. Plant and Equipment Orders vi. Building Permits vii. Stock Prices viii. Money Supply ix. Interest Rate Spread x. Consumer Expectations b. Coincident Indicators i. Employees on Non-Agricultural Payrolls ii. Personal Income Less Transfer Payments iii. Industrial Production iv. Manufacturing and Trade Sales c. Lagging Indicators i. Average duration of unemployment, in weeks ii. Ratio, manufacturing and trade inventories to sales iii. Change in labor cost per unit of output in manufacturing iv. Average Prime Rate charged by Banks v. Commercial and Industrial Loans Outstanding vi. Ratio, consumer installment credit outstanding to personal income vii. Changes in Consumer Price Index for services
i. Top-Down in reverse. First pick a stock, check what industry it is part of and assess the industry’s investment potential, then check the condition of the economy and determine if its condition is favorable to that industry. Investors labeled as Bottom-Up analysts are also called “stock pickers.”
i. Pure Competition ii. Imperfect Competition iii. Oligopoly iv. Monopoly
i. Development Phase ii. Expansion Phase iii. Maturity Phase iv. Declination Phase
i. Stock listing in the Wall Street Journal 1. Stock Dividends 2. Stock Splits ii. Stock Valuation 1. The Required Rate of Return of a Risky Asset (Ke) 2. Dividend Discount Model a. General Model b. Constant Growth Model 3. P/E Ratio Method iii. Preferred Stocks 1. Hybrid Security 2. Participating Preferred 3. Cumulative Preferred 4. Valuation = dividend/rate = price
i. Best Effort ii. Standby iii. Un-syndicated iv. Direct Placement
i. Full-Service Firms 1. Merrill Lynch 2. Smith-Barney ii. Discount Firms 1. Charles Schwab 2. Fidelity Investments 3. Quick & Reilly 4. Brown & Company
i. Licensed Professional ii. The Coveted National Association of Securities Dealers (NASD) Series 7 Exam iii. Three magic words: Buy – Sell – Commission
i. Cash ii. Margin 1. Maintenance Margin
i. Market Order ii. Limit Order iii. Stop (loss) order iv. Combinations of above v. Short Selling 1. Selling Borrowed securities 2. Sell High, Buy Low 3. No time limit 4. Must eventually return borrowed securities 5. Short Interest 6. Short Interest Ratio 7. Days-to-Cover 8. Short Squeeze 9. Short Against the Box
i. Chicago Board Options Exchange (CBOE) ii. Chicago Futures Exchange iii. Option Clearing Corporation (OCC)
1. Calls 2. Puts ii. Premium iii. Intrinsic Value iv. Time Component, Speculative Premium v. In-the-Money vi. At-the-Money vii. Out-of-the-Money viii. Insurance ix. Speculation x. Selling (Writing) Options xi. Covered xii. Naked
Last Updated: May, 2007 |
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