TCU Investments 1 Exam 1 (Peckham) – Questions
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Terms in this set (73)
passive management buying and holding a diversified portfolio, there is
no attempt to identify mispriced securities, but
rather use the time value of money to allow stocks
to appreciate in value
active management identify mispriced securities and forecast market
trends to decide how to trade and invest
key differences between active and active management is much more involved and
passive management passive management leverages time to allow for
gains
primary market newly issued securities offered to the public for the
first time, investment bankers underwrite the issue
during the IPO (market for new issues of securities)
IPO initial public offering, the first public sale of stock by
a formerly private company
, underwriters take the risk of selling the securities to the public
and make money on the difference between what
they pay the issuer and what they sell the securities
for (they buy the securities from the issuing
company and resell them)
secondary markets preexisting securities that are traded among
investoers (traded on online platforms)
privately held firms primary offerings where shares are sold directly to a
small group of investors (up to 2000 shareholders
and fewer obligations to release financial
statements to the public)
publicly traded companies securities sold to the public, investors trade shares;
there's an unlimited number of shareholders and the
company is required to release financial statements
to the public
venture capital equity investment to finance new firms for minority
control
- usually associated with higher risk and trying to hit
"home runs," but you're investing a lot of capital into
companies that may or may not be successful long-
term
- holdings typically last 5-10 years
private equity investments into privately held companies with the
intent of gaining majority controls
- much lower risk than VC because the companies
have already established stable cash flows
- typically held for 3-7 years
subprime loans that are made to borrowers with a higher risk
of default than prime borrowers
- typically charge higher interest rates to
compensate for the increased risk of default
- typically associated with mortgages, but can be
applied to other loans as well
With Clear Solutions
Add to calendar
Play your way to mastery with fun games
Match Blocks Charms NEW
Terms in this set (73)
passive management buying and holding a diversified portfolio, there is
no attempt to identify mispriced securities, but
rather use the time value of money to allow stocks
to appreciate in value
active management identify mispriced securities and forecast market
trends to decide how to trade and invest
key differences between active and active management is much more involved and
passive management passive management leverages time to allow for
gains
primary market newly issued securities offered to the public for the
first time, investment bankers underwrite the issue
during the IPO (market for new issues of securities)
IPO initial public offering, the first public sale of stock by
a formerly private company
, underwriters take the risk of selling the securities to the public
and make money on the difference between what
they pay the issuer and what they sell the securities
for (they buy the securities from the issuing
company and resell them)
secondary markets preexisting securities that are traded among
investoers (traded on online platforms)
privately held firms primary offerings where shares are sold directly to a
small group of investors (up to 2000 shareholders
and fewer obligations to release financial
statements to the public)
publicly traded companies securities sold to the public, investors trade shares;
there's an unlimited number of shareholders and the
company is required to release financial statements
to the public
venture capital equity investment to finance new firms for minority
control
- usually associated with higher risk and trying to hit
"home runs," but you're investing a lot of capital into
companies that may or may not be successful long-
term
- holdings typically last 5-10 years
private equity investments into privately held companies with the
intent of gaining majority controls
- much lower risk than VC because the companies
have already established stable cash flows
- typically held for 3-7 years
subprime loans that are made to borrowers with a higher risk
of default than prime borrowers
- typically charge higher interest rates to
compensate for the increased risk of default
- typically associated with mortgages, but can be
applied to other loans as well
