TAILIEUCHUNG - Lecture Focus on personal finance: An active approach to help you develop successful financial skills (2e) - Chapter 11B

Chapter 11B - Investing basics and evaluating bonds. In this chapter, you will learn to: Explain why you should establish an investment program; describe how safety, risk, income, growth, and liquidity affect your investment program; identify the factors that can reduce investment risk; understand why investors purchase government bonds. | 11B Investing Basics and Evaluating Bonds #2 Recall the concept of asset allocation 11- One Effect of Asset Allocation: A Weighted Total Return Ultraconservative “Investors” Are Really Just “Savers” People who invest very conservatively They do not get ahead financially over the long term because taxes and inflation offset most of their interest earnings Remember “The Rule of 72”? 72/4% = 18 years 72/8% = 9 years (money doubles much faster) Identify the Types of Investments You Want to Make Do You Want to Lend Your Money or Own an Asset? Debts – “loanership” (lending) investments. Fixed Maturity – the borrower agrees to repay the principal to the investor on a specific date. Fixed Income – the borrower agrees to pay the investor a specific rate of return for use of the principal. Equities – “ownership” investments. Potential for a higher return by sharing in profits The Risk Pyramid Reveals the Trade-offs Between Investment Risk and Return Inflation To beat inflation, one must invest money so that it earns a higher after-tax return than the inflation rate Real Rate of Return – the return after subtracting the effects of both inflation and income taxes. Example: 10% return, after taxes (25% tax bracket), 4% inflation, real rate of return of after taxes and inflation Objective 5 Recognize Why Investors Purchase Corporate Bonds Corporate Bonds A corporation’s written pledge to repay a specified amount of money with interest An interest-only loan Considered safer than co. stocks A “fixed-income” security A form of debt financing (bond owners repaid in future) 11- Corporate Bonds Face Value Dollar amount bondholder receives at bond’s maturity date Usually $1,000 Coupon rate Stated interest rate Interest payments made every six months Example: $1,000 x = $58 (in two $29 payments) Maturity Date = date on which face value repaid; generally 1 to 30 years 11- Corporate Bonds Bond Indenture Legal document describing conditions of the bond issue .

• Tài chính doanh nghiệp
• Personal finance
• Focus on personal finance
• Financial skills
• Investing basics
• Evaluating bonds
• Investment program
• Personal financial planning
• Financial planning
• Financial decisions
• Money management skills
• Money management
• Personal financial statements
• Lecture Personal finance
• Financial planning process
• Financial plans
• Personal financial process
• Financial goals
• Financial statements
• Personal balance sheet
• Personal financial
• Lecture Personal financial planning
• Characteristics of finance
• Finance tools
• Consumer credit
• Finance charge
• Protecting your credit
• Household finance
• Household structure
• Financial plan
• Calculate taxable income
• Calculate taxes owed
• Financial services
• Payment account
• Payment services
• Closed end credit
• Smart cards
• Consumer purchasing strategies
• Practical purchasing strategies
• Implied warranty
• Financing housing
• Rental activities
• Home buying process
• Automobile insurance
• Insurance company
• Insurance program
• Disability income insurance
• Health insurance sources
• Life insurance
• Stock life insurance companies
• Investing in stocks
• Preferred stock
• Evaluate stock investments
• Common stocks
• Investing in mutual funds
• Mutual fund
• Open end funds
• Estate planning
• Starting early
• Tax sheltering
• Income taxes
• Taxable income
• Managing cash
• Purchasing decisions
• Rental option