Essentials of Investments: Chapter 2 - Financial Markets and Instruments presents Major Classes of Financial Assets or Securities, Markets and Instruments, Money Market Instrument Yields, Bank Discount Rate, Bond Equivalent Yield. | 1 Bodie • Kane • Marcus Essentials of Investments Fourth Edition Chapter 2 Financial Markets and Instruments Irwin / McGraw-Hill © 2001 The McGraw-Hill Companies, Inc. All rights reserved. 2 Bodie • Kane • Marcus Essentials of Investments Fourth Edition Major Classes of Financial Assets or Securities • Debt – Money market instruments – Bonds • Common stock • Preferred stock • Derivative securities Irwin / McGraw-Hill © 2001 The McGraw-Hill Companies, Inc. All rights reserved. 3 Bodie • Kane • Marcus Essentials of Investments Fourth Edition Markets and Instruments • Money Market – Debt Instruments – Derivatives • Capital Market – Bonds – Equity – Derivatives Irwin / McGraw-Hill © 2001 The McGraw-Hill Companies, Inc. All rights reserved. 4 Bodie • Kane • Marcus Essentials of Investments Fourth Edition Money Market Instruments • • • • • • Treasury bills Certificates of deposit Commercial Paper Bankers Acceptances Eurodollars Repurchase Agreements (RPs) and Reverse RPs • Federal Funds Irwin / McGraw-Hill © 2001 The McGraw-Hill Companies, Inc. All rights reserved. 5 Bodie • Kane • Marcus Essentials of Investments Fourth Edition Money Market Instrument Yields • Yields on Money Market Instruments are not always directly comparable Factors influencing yields • Par value vs. investment value • 360 vs. 365 days assumed in a year (366 leap year) • Bond equivalent yield Irwin / McGraw-Hill © 2001 The McGraw-Hill Companies, Inc. All rights .
