Asset Classes and Financial Instruments推荐.pdfVIP

CHAPTER TWO Asset Classes and Financial Instruments YOU LEARNED IN  Chapter 1 that the pro- markets. Money market instruments include cess of building an investment portfolio usu- short-term, marketable, liquid, low-risk debt ally begins by deciding how much money to securities. Money market instruments some- allocate to broad classes of assets, such as safe times are called cash equivalents, or just cash money market securities or bank accounts, for short. Capital markets, in contrast, include longer term bonds, stocks, or even asset longer term and riskier securities. Securities classes like real estate or precious metals. This in the capital market are much more diverse process is called asset allocation. Within each than those found within the money market. class the investor then selects specific assets For this reason, we will subdivide the capital from a more detailed menu. This is called market into four segments: longer term bond security selection. markets, equity markets, and the derivative Each broad asset class contains many spe- markets for options and futures. cific security types, and the many variations We first describe money market instru- on a theme can be overwhelming. Our goal ments. We then move on to debt and equity in this chapter is to introduce you to the securities. We explain the structure of various important features of broad classes of securi- stock market indexes in this chapter because ties.