Introduction a dollar today is worth more than a dollar tomorrow a safe dollar is worth more than a risky dollar People have different degrees of risk aversion. Some are more willing to take a chance than others A tradeoff exists between risk and return
To consume, to save, or to invest a dollar that is earned Both saving and investing amount to consumption shifting through time However, saving involves little, if any, risk, while investing is a risky endeavor
Corporations, Shares, and shareholder Rights People who own stock have an equity interest in the organization e f a business has shares of stock it is organized as a corporation rather than a proprietorship or a partnership The shares of some corporations are closely held, while others are publicly held The two types of stock are common stock and preferred stock
Bond Principles: Identification- of Bonds Bonds are identified by issuer, coupon rate, and maturity. The face value of a bond is called its par value. e.g. 5 of \Hertz sevens of 03\(Hertz 7s03) .A legal document called the indenture contains the details of the bond issue
Market orders are to be executed as soon as possible after reaching the exchange floor. Limit orders must specify a price and a time limit, e.g. \Buy 500 at $90, good till canceled.\ A stop order differs from a limit order in that the order is only executed if the specified price, called the stop price, is touched. Stop orders become market orders when the stop price is reached
