Financial Markets

24 Feb 0

Money Market

Notes

Short term (< 1 year).
Safest form of investment.
Low risk / low return.
Marketable.
Highly liquid.

Instruments

Bankers Acceptances – Company issued paper guaranteed by a bank.
Brokers’ Calls – Rate at which brokers borrow from the bank.
Certificates of Deposit (CDs) – Bank issued.
Commercial Paper (CP) – Company issued.
Eurodollars – Dollar denominated deposits outside the US (Euro = outside).
Fed Funds – Deposits by banks with the Federal Reserve / Central Banks. Loans between banks (overnight).
London Inter-Bank Offered Rate (LIBOR).
Repurchase Agreements (Repos/Reverse Repos) – Short term loans (overnight).
US Treasury Bills (T-Bills) – Government issued.

Admin

Financial Instruments, Financial Markets

24 Feb 0

The Investment Process

(1) Top Down Approach

Asset Allocation Process

Commonly used method by Fund Managers
Determine sectors or industries, i.e. Global Industry Classification Standard (GICS)
1. Communication Services
2. Consumer Discretionary
3. Consumer Staples
4. Energy
5. Financials
6. Health Care
7. Industrials
8. Information Technology
9. Materials
10. Real Estate
11. Utilities
Determine assets for sectors (industries)

(2) Bottom Up Approach

Security Selection Process

Commonly used method by Hedge Fund Managers

Efficient Markets

Active Management
Passive Management

Admin

Financial Markets

11 Sep 0

Clearing House Electronic Sub-register System (CHESS)

Notes

The Clearing House Electronic Sub-register System (CHESS) is an Australian Securities Exchange (ASX) system which facilitates the transfer and settlement of securities between market participants.