Solution Manual for Fundamentals of Investing 12th Edition by Smart

6084 WordsAug 26, 201525 Pages
Chapter 1 The Investment Environment  Outline Learning Goals I. Investments and the Investment Process A. Attributes of Investments 1. Securities or Property 2. Direct or Indirect 3. Debt, Equity, or Derivative Securities 4. Low- or High-Risk Investments 5. Short- or Long-Term Investments 6. Domestic or Foreign B. The Structure of the Investment Process 1. Suppliers and Demanders of Funds a. Government b. Business c. Individuals 2. Types of Investors Concepts in Review II. Types of Investments A. Short-Term Investments B. Common Stock C. Fixed-Income Securities 1. Bonds 2. Convertible Securities 3. Preferred Stock D. Mutual Funds E. Exchange-Traded Funds F. Hedge Funds G. Derivative Securities 1. Options 2. Futures H. Other…show more content…
5. Next, the following investment vehicles available to individual investors are discussed: short-term vehicles, common stock, fixed‑income securities, mutual funds, exchange-traded funds, hedge funds, real estate, tangibles, tax-advantaged investments, and options and futures. The text describes their risk-return characteristics in a general way. The instructor may want to expand on the advantages and disadvantages of investing in each, although they will be treated in greater detail in subsequent chapters. It is vital for any investor to establish investment goals that are consistent with his or her overall financial objectives. 6. Once the investment goals have been well specified, the investor can adopt an investment plan consistent with these goals, select suitable investments, and build a diversified portfolio and manage it. 7. Personal taxes are discussed in terms of types of income and tax rates. The investment process is affected by current tax laws. Examples of tax shelters, especially tax-advantaged retirement vehicles, and tax planning are provided. 8. Once investment goals are established, it is important to understand how the investment process is affected by different economic environments. The chapter talks about types of investments such as stocks, bonds, and tangibles as they are affected by business cycles, interest rates, and inflation. 9. Liquidity is defined, and short-term securities that can

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