What are Stocks?
http://www.investopedia.com/video/play/what-are-stocks
1. Definition of a stock?
2. What do stockholders have claim on?
3. What assets are mentioned in the
video?
4. What major stock exchanges are
mentioned in the video clip?
Introduction to Bonds
http://www.investopedia.com/video/play/understanding-bonds/
A bond is a (1)... instrument issued by
governments, corporations or other
entities. It is a loan that (2)... make to
the bond issuer. The (3)... of a bond
(when it’s first issued) is the amount of
money being loaned. Investors receive
(4)... known as bond coupon. Bonds
have different (5)... (e.g. 1year, 3 years
or 30 years) after which the bond issuer
(6)... the loan to the investor.
BONDS
Bonds
 What?
 Who?
 Why?
What? Who? Why?
 borrowing/lending:
face value (principal)
coupon (interest rate)
 bond issuers
governments (government bonds)
companies
(corporate bonds)
 bondholders
-individuals & institutional investors
-selling or holding bonds until maturity
Debt Financing vs. Equity Financing
BONDS
ADVANTAGE
DISADVANTAGE
FOR INVESTORS
MK, p.81
FOR ISSUERS
More about bonds (MK, p.81)
 Meaning of T-notes, T-bonds and
gilts?
 Who are market makers?
 Bid vs. offer price?
 What is a spread?
 What is inversely related?
 What does the yield of a bond
depend on?
Introduction to Bonds (video)
http://www.investopedia.com/video/play/understanding-bonds
1. Definition of bonds?
2. Term used for the price of a bond on the
primary market?
3. Maturities mentioned?
4. Coupons mentioned?
5. Why do corporations/governments issue
bonds?
6. What is important to remember about
bonds?
The Financing of Corporate Activity
Based on: McConnell, C.R., Brue, S.L. (1996). Economics. McGraw-Hill Inc.
Text headings:
 Corporate finance
 Stocks vs. Bonds
 Bond risks
The Financing of Corporate Activity
Based on: McConnell, C.R., Brue, S.L. (1996). Economics. McGraw-Hill Inc.
Features of well-organized writing:
1. Topic sentences
2. Paragraphing:
1 pg.=1 idea =1 heading
3. Linking words (e.g. connectors, ….)
CORPORATE FINANCE
 Full text: Generally speaking, ......
three different ways... First, ...,
Second, ..., For example, ...Third,...
 Notes:
THREE WAYS OF CORPORATE FINANCE:
1.
2. .... (e.g. ...)
3.
STOCKS
VS.
BONDS
 Full text: In contrast, ..., For example, ...
This means
that...
There are clearly important differences between...,
First,... Second,..., On the one hand,..., On the other, ....
 Notes:
STOCKS
-ownership
vs.
BONDS
-lending
-less risky:
1.
2.
Bond risks
 Full text:
clear paragraphing & topic sentences
 Notes:
CORPORATE BOND RISKS
1.
2.
3.
Stocks vs. Bonds (video ex.)
http://www.investopedia.com/video/play/stocks-versus-bonds
 Stocks and bonds are the two biggest 1… of
most 2 … . Stocks usually provide a steady
3…, and bonds tend to ensure a 4…. .
Bonds can be bought from 5…, and a
careful selection of stocks will include 6… .
A combination of stocks and bonds is good
for all kinds of investors. For aggressive
investors, bonds may 7... the risk of stocks
and stabilize the 8… of the market, while
stocks can help 9…. investors 10… against
the risk of inflation.