The Overall Guide to Investing is a roadmap to the securities market, the various types of investment securities (including stocks, bond, options, futures, tax-advantaged investments, and mutual funds), and the risk-return characteristics of each. The materials focus on the principles and tools of investment analysis, asset allocation, and portfolio selection and management. The course covers available investments and features, the advantages and disadvantages of each investment category (including global investing), and when a particular investment type might be suitable for you.
Upon successful completion of this course, participants will be able to:
- Recognize the requirements for different types of investments, noting the differences between fixed versus variable-income, financial versus real assets, direct versus indirect, and long-term versus short-term
- Identify the features and attributes of stocks and bonds, noting applicable benefits and drawbacks of each
- Note defining characteristics of primary and secondary capital markets
- Identify various types of securities transactions and what is involved in each type
- Recognize the requirements for stock splits and stock dividends, noting similarities and differences
- Identify applicable advantages or disadvantages of buying stock on margin and selling stock short
- Recognize the attributes of return on investment, noting how ROI is classified and measured
- Identify different types of risk, noting potential risks you may face in a business environment, and applicable techniques to reduce risk
- Note how investment alternatives affect the risk-return trade-off
- Identify the objectives and benefits of fundamental analysis of investments, Altman's Z-Score, and insolvency, noting the importance of risk analysis during periods of financial growth and financial distress
- Recognize key financial ratios and how these ratios are used to evaluate a company's liquidity
- Recognize the various tools used in technical analysis, noting key terms and attributes
- Note the objectives of charting and what types of charts may be used to analyze investments and market conditions
- Identify key indicators of market and stock performance, noting how these indicators are used
- Note the attributes of contrarian indicators and the contrarian approach
- Recognize the various types of stock, noting key characteristics, how stock is rated, and how to calculate the expected return from preferred stock
- Recognize the defining characteristics of the time value of money concept
- Note ways to calculate the fundamental value of common stock
- Recognize the components of price/earnings (P/E) ratio approaches as well as other pragmatic approaches
- Recognize the defining characteristics of bonds, noting the various types of bonds that are available as well as factors to consider when selecting a bond
- Note which bonds carry the least amount of risk as well as ways to determine interest rate risk
- Recognize the components of municipal and government bonds as well as fixed income securities, noting three approaches for investing in municipal bonds
- Recognize key terms associated with options, noting the defining characteristics for each
- Specify ways to determine the value of an option, a warrant, and return on investment, noting factors that affect price
- Note the usage of stock options by hedgers and speculators
- Recognize key attributes of futures contracts and commodities, noting the returns and risks associated with the use of futures contracts and derivatives
- Identify the uses of financial futures, interest rate futures, currency futures, and index futures, noting applicable differences and ways to minimize risk
- Note the advantages and risks associated with global investing
- Recognize ways to invest globally, noting the features of various types of international funds
- Recognize the attributes of tax advantaged investments such as annuities, limited partnerships, real estate investment trusts (REITs), and a real estate operating company (REOC)
- Identify various types of retirement and pension funds, noting applicable advantages and disadvantages of each
- Recognize key attributes of mutual funds, index funds, and ETFs
- Determine the total return on a mutual fund
- Note the requirements for performance benchmarking and target-date funds
- Note the objectives and process of portfolio diversification to reduce risk and allocate assets with mutual funds
- Recognize the use of beta coefficients to adjust asset allocation
- Recognize various available investment strategies for different life stages and goals
Table of Contents
What are the Sources of Money for Investing?
What are the Types of Investments?
Fixed-Income and Variable Income Investments
Financial Assets vs. Real Assets
Direct and Indirect Investments
Long-Term and Short-Term Investments
What are the Features of Bonds?
What are the Features of Common Stocks?
What are the Types of Dividends?
What are Convertible Securities?
What are Derivative Products?
What is the Difference between Common Stocks and Mutual Funds?
What Other Types of Investments Exist?
What are the Factors to be Considered in Investment Decisions?
What Tax Aspects Should You Consider When Investing?
What are the Drawbacks and Benefits of Buying Municipal Bonds?
What about Retirement?
How Are Capital Losses Treated for Tax Purposes?
How Do Risk and Return Relate?
What is the Difference between a Marketable Investment and a Liquid Investment?
How Do Interest Rates Affect the Market Value of Your Investment?
What are the Expenses Associated with Your Investments?
How Aggressive or Conservative Should You Be?
Steps in Investment Planning
Chapter 1 – Review Questions
Chapter 2 – Financial Markets and Investment Process
What are the Capital Markets?
What is the Over-The-Counter Market?
What about the Futures Market?
What Do Security Transactions Involve?
What are the Types of Securities Transactions?
What are the Various Kinds of Orders to Your Broker?
When is the Settlement Date?
How do You Pick a Stock Broker?
Are You Better off with Stock Splits and Stock Dividends?
What You Must Know About Cash Dividends
Are Dividend Reinvestment and Cash Option Plans for You?
Is Buying Stock on Margin (Margin Trading) a Good Idea?
Is Selling A Stock Short Advisable?
Chapter 2 – Review Questions
Chapter 3 – Return and Risk
What is Return?
How Do You Measure the Return Over Time?
What is the Effective Annual Yield?
How Do You Compute the Expected Rate of Return?
How Do You Measure Risk?
What Risks Do You Face?
What Can be Done to Reduce Risk?
What are the Considerations in Determining How Much Risk to Take?
How Does the Risk-Return Trade-Off Work?
What is the Meaning of Beta?
How do you Read Beta?
How Do Investment Alternatives Affect the Risk-Return Trade-Off?
Chapter 3 – Review Questions
Chapter 4 – Fundamental Analysis
What is Fundamental Analysis?
Why is Risk Analysis Important?
Why are Political Uncertainties Important to Consider?
Looking at the Industry
Analyzing Financial Statements
What and Why of Financial Statement Analysis?
What are Horizontal and Vertical Analysis?
Working with Financial Ratios
How do you Evaluate a Company's Liquidity?
How Well Does the Company Utilize its Assets?
Is the Business Solvent?
Is This a Profitable Company?
How are the Company's Earnings and Market Value Related?
Overall, Would You Invest in this Company?
Bankruptcy Prediction Model
A Systematic Approach for Stock Picking
Chapter 4 – Review Questions
Chapter 5 – Technical Analysis
What is Technical Analysis?
What are the Tools of Technical Analysis?
The Dow Theory
What is Charting?
What Types of Chart May Be Used?
What are Moving Averages?
What Do Support and Resistance Levels Show?
What is Relative Strength Analysis?
Public vs. Computer Charting
What do you do with Key Indicators?
Why is Price-Trading Volume Important?
Why is Market Breadth Relevant?
What is Barron’s Confidence Index and How is it Used?
What are the Contrarian Indicators?
Why is the Amount of Cash Held by the Mutual Funds Revealing?
What is the Short Interest Ratio?
Why Look at Short Sales by Specialists?
What is the Odd-Lot Trading Indicator?
What is the Index of Bearish Sentiment?
Are Puts and Calls Revealing?
What Does Chicago Board Options Exchange Volatility Index (VIX) Represent?
Computerized Technical Analysis
Chapter 5 – Review Questions
Chapter 6 – Common Stocks and Preferred Stocks
What is Common Stock?
What are the Characteristics of Common Stock?
What Types of Stocks are There?
What is the Yield on Common Stock Investments?
What is Preferred Stock?
How is the Preferred Stock Rated?
How Do You Calculate Expected Return From Preferred Stock?
Comparison to Bond Yields
What are the Types of Preferred Stock?
What About Investing in Money Market Preferred Stock?
Chapter 6 – Review Questions
Chapter 7 – How Much Are You Willing To Pay For A Common Stock?
What is Time Value of Money?
Future Value of $1
Future Value of an Annuity Of $1
Present Value of $1
Present Value of an Annuity of $1
What is the Fundamental Value of Common Stock?
How Do You Determine the Required Rate of Return?
What are Some Price/Earnings Ratio Approaches?
A Caveat about P/E Ratios
What Other Pragmatic Approaches Exist?
Stock Valuation by PC
What is the Bottom Line?
Chapter 7 – Review Questions
Chapter 8 – Fixed Income Securities
What is a Bond?
What are the Characteristics of Bonds?
Bond Yields, Interest Rates, and Bond Prices
What is the Yield Curve?
What are the Types of Bonds?
How to Select a Bond?
How Do You Determine Interest-Rate Risk?
Macaulay’s Duration Coefficient
Interest Rate Elasticity
How Do You Compute The Effective Interest Rate On A Bond?
What are Municipal Bonds?
How About Trading in Municipal Bonds?
What are Government Bonds?
Treasury Strips (Separate Trading of Registered Interest and Principle of Securities)
How Do You Buy Treasuries?
What are Government Agency Bonds?
What are Other Fixed Income Securities?
How Do You Invest in Savings Bonds?
I and EE Savings Bond Comparison
Should You Invest in a Bond Fund?
How About Considering Unit Investment Trusts?
Investing in Municipal Bonds; Three Approaches
What About Investing in Mortgage-Backed Securities?
Chapter 8 – Review Questions
Chapter 9 – Investing In Options
What are Options?
The Value of Right
Return on A Warrant
The Value of a Warrant
Leverage Effect of a Warrant
Calls and Puts
In-the-Money and Out-of-the-Money Call Options
In-The-Money and Out-Of-The-Money Put Options
Call and Put Investment Strategies
Naked or Covered Options
Chapter 9 – Review Questions
Chapter 10 – Futures Contracts
What is a Futures Contract?
What is the Difference Between a Long and Short Position?
How are Futures Contracts Traded?
Is Futures Trading Very Risky?
What are Commodities Futures?
What Returns and Risks are there for Futures Contracts?
Who Employs Futures?
What Ways are Available to Minimize Risks?
What are Financial Futures?
How Do Interest Rate Futures Work?
How Do Currency Futures Work?
What is a Stock Index Futures?
How Do You Transact in Futures?
Chapter 10 – Review Questions
Chapter 11 – Global Investing
What are the Advantages of Global Investing?
Broader Stock Selection
Higher Prospective Returns
Reduction of Risk
What are the Risks in Investing Globally?
Currency (or Foreign Exchange) Risk
Political (or Sovereign) Risk
What are the Ways to Invest Globally?
Purchasing Foreign Stock Directly
How May Your Account be Handled?
American Depository Receipts (ADRs)
Buying Foreign Bonds
What is the Difference Between a Eurobond and Foreign Bond?
What are the Advantages of Foreign Convertibles?
What Does the Yield Depend On?
Investing in International Money Markets
What are the Ways of Investing in International Money Markets?
Buying Shares of U.S.-Based Multinational Corporations
Investing in International Mutual Funds and EFTs
Global Portfolio Diversification via Mutual Funds
What are the Features of the Various Types of International Funds?
Global and International Stock Funds
International Bond Funds
International Money Market Funds
How Do You Select Mutual Funds and EFTs?
Sources of Information
Chapter 11 – Review Questions
Chapter 12 – Tax-Advantaged Investments
What are the Related Tax Rules and Applications?
What Tax Advantage is there to Real Estate?
What are Limited Partnerships?
What are Real Estate Investment Trusts (REITs)?
Are REIT Yields Attractive?
Kinds of REITs
Are REITs for You?
Choosing a REIT
Sources of Information for REITs
What is a Real Estate Operating Company (REOC)?
What are the Tax Implications of Retirement Plans?
Keeping Your Eye on Retirement
What are Types of Pension Funds?
Retirement Plans: The Basic Rules
Higher Limits of Contribution to Various Retirement Accounts
How Do Annuities Work?
Fixed (Guaranteed) Annuities
What are Advantages of Annuities?
What are the Disadvantages of Annuities?
What is the Difference Between an Immediate Annuity and a Deferred Annuity?
What are Qualified Annuities?
What are Some Types of Annuities?
What Sales Charges Exist?
How Do You Purchase Annuities?
Is an Annuity Right for You?
Chapter 12 – Review Questions
Chapter 13 – Mutual Funds
What is Mutual Fund Investing?
What are the Attributes of Mutual Funds?
What are Common Services Offered by Mutual Funds?
How Do You Make Money in a Mutual Fund?
What is the Total Return on the Mutual Fund?
How Much Will Mutual Funds Charge You?
What Kinds of Mutual Funds Exist?
What is the Difference Between Open-End and Closed-End Funds?
What are the Types of Mutual Funds?
What Investment Programs are Tied with Mutual Funds?
How Do You Select a Bond (Income) Fund?
What are Some Guidelines to Follow when Investing in a Bond Fund?
Are Tax-Exempt Municipal Bond Funds for You?
Are Unit Investment Trusts for You?
What has been the Performance of Their Mutual Fund?
What is the Return on the Mutual Fund?
What are the Measures of Risk (or Volatility) of a Mutual Fund?
What is Beta?
What are R-Squared and Standard Deviation?
What is Alpha Value?
How Do You Choose a Mutual Fund?
What is Performance Benchmarking?
What About Mutual Fund Peer Group Rankings
What Market Indexes are Used as Benchmarks?
What Risk-Reducing Strategies for Investing In Mutual Funds are Available?
How Does Dollar Cost Averaging Work?
Investing in Index Funds: No-Brainer Investment Method
Where Can You Obtain Mutual Fund Information and Ratings?
Online Screening Resources
What about Investing in Money Market Funds?
What Sources of Information Exist, including Online Services?
How Do Closed-End Funds Work?
What are the Advantages and Disadvantages of Closed-End Funds?
Sources of Information and Online Services for Closed-End Funds
How Do You Determine if Hedge Funds are Right for You?
Tax Tips with Mutual Funds
Chapter 13 – Review Questions
Chapter 14 – Diversification, Portfolio Construction, and Asset Allocation
Diversification is the Key
How to Allocate Assets with Mutual Funds?
Investing in an Asset Allocation Fund
What is a Do-It-Yourself Portfolio Construction?
How Do You Calculate Your Allocation Mix?
Rebalancing: Fine-Tune Your Asset Mix
Can You Obtain Help for Constructing an Asset Allocation Portfolio?
How Can You Use Beta for Asset Allocation?
Life-Cycle Guide: Recommended Asset Allocation
How Your Family Situation Affects Your Financial Goals and Investment Conditions?
Chapter 14 – Review Questions
Review Question Answers and Rationales
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