1. Stocks & bonds overview
1.1. Stocks
1.1.1. shares of ownership of a corporations assets & earnings
1.1.2. Types
1.1.2.1. Common
1.1.2.1.1. buy for appreciation of value
1.1.2.1.2. pays dividends after preferred are paid
1.1.2.2. Preferred
1.1.2.2.1. pays fixed dividends before common stockholders
1.1.2.2.2. Types
1.2. Bonds
1.2.1. interest bearing long-term debt
2. Stocks
2.1. How to evaluate common stocks
2.1.1. beta value
2.1.1.1. measure of stock volatility as compared to the rest of the market
2.1.2. fundamental analysis
2.1.2.1. value based on expected stream of earnings
2.1.2.2. used by most analysts & investors
2.1.2.3. measures:
2.1.2.3.1. corporate earnings
2.1.2.3.2. earnings per share (EPS)
2.1.2.3.3. price-earnings ratio
2.1.2.3.4. book value
2.1.2.3.5. dividend payout ratio
2.1.3. technical analysis
2.1.3.1. uses statistics based on market activity over time
2.2. Using internet to evaluate stocks
2.2.1. Company's annual report
2.2.2. Other sources:
2.2.2.1. The Motley Fool
2.2.2.2. Yahoo Finance
2.2.3. Market indices
2.2.3.1. dow jones industrial averages
2.2.3.1.1. tracks prices of 30 blue-chip companies
2.2.3.2. S & P 500
2.2.3.2.1. tracks 500 large firms
2.2.3.3. NASDAQ
2.2.3.3.1. tracks stocks that are not in S & P
2.3. How to buy & sell stock
2.3.1. Open a brokerage account
2.3.1.1. Full-service firm
2.3.1.1.1. offers full-range of services including investment advice & research
2.3.1.1.2. Edward Jones
2.3.1.2. discount firm
2.3.1.2.1. offer fewer services & fees 30%-80% less than full service
2.3.1.2.2. Fidelity, Charles Schwab
2.3.1.3. online discount firm
2.3.1.3.1. just provides trading service for low fees
2.3.1.3.2. E*Trade
2.3.2. video
3. Bonds
3.1. 3 types of bonds
3.1.1. corporate
3.1.1.1. interest bearing certificates of long-term debt issued by a corporation
3.1.2. US Government Securities
3.1.2.1. 2 types:
3.1.2.1.1. Treasury securities
3.1.2.1.2. Federal agency issue notes, bonds & certificates
3.1.3. Municipal Government bonds
3.1.3.1. long-term debt issued by local governemnts
3.1.3.1.1. used to fund projects like roads, bridges, parks....
3.2. Pricing bonds
3.2.1. Value of bond =
3.2.1.1. PV interest payment + PV of lump sum
3.3. 3 ways sold
3.3.1. face value
3.3.1.1. value of bond = value at maturity
3.3.2. discount
3.3.2.1. below face value
3.3.3. premium
3.3.3.1. above face value
3.4. current yield
3.4.1. = annual interest / bond market price
3.5. yield to maturity
3.5.1. annual effective rate of return if bond held until maturity