This chapter discusses various investment alternatives, organized into money market securities, capital market securities (bonds and stocks), and derivative securities. It identifies key features of these assets like asset-backed securities, stock splits, bond ratings, and ADRs. The chapter explains how investors can directly invest by buying and selling securities themselves, or indirectly through investment companies. It also covers major types of financial assets available internationally and defines non-marketable assets with at least some liquidity like Treasury bills and various types of bonds.

1. C H A P T E R 2
INVESTMENT
ALTERNATIVES

2. After reading this chapter you will be able to:
 Identify money market and capital market securities
and understand the important features of these
securities.
 Recognize key terms such as asset backed-securities,
stock splits, bond rating, and ADRs.
 Understand the basics of two derivative securities,
options and futures, and how the fit into the
investor’s choice set.

3.  This chapter explains the most important investment
alternative available to investors, ranging from
money market securities to capital market securities-
primarily, bond and stocks to derivative securities.
 The organize of type financial assets available in
money market and capital market and provide a
good understanding of the securities.

4. ORGANIZING FINANCIAL ASSETS
The concentration of investment alternatives available
through:
 Direct Investing, investors buy and sell securities
themselves, typically though brokerage account.
 Indirect Investing, the buying and selling of the
shares of investment companies, which, in turn,
hold portfolios of securities. Investment manager

5. Major Types of Financial Assets

6. ORI : OBLIGASI RITEL INDONESIA
SUN : SURAT UTANG NEGARA

7. An International Perspective
 Investors should adopt an international perspective
in making their investment decisions.
 GO INTERNATIONAL
 Money market assets, bond, and stocks, are available
from many foreign market investors.

8. Nonmarketable Financial Assets
 Nonmarketable Financial Assets
at least have a offer liquidity
 Money Market Securities
Treasury bill
 Fixed Income Securities
Bonds
Bond Characteristics (par value/face value), zero coupon, call
provision
 Types Of Bond
Treasury bond, Government agency, municipal, and corporate bond
Bond rating

9. Fixed Income Securities
Fixed Income Securities
 Bonds
Bond Characteristics (par value/face value), zero
coupon, call provision
 Types Of Bond
Treasury bond, Government agency, municipal, and
corporate bond
Bond rating

10. Bond Rating

11. Equity Securities
Equity Securities
 Preferred Stock, an equity security with an intermediate claim
(between the bondholders and the stockholders on a firms
assets and earning.
 Common Stock, an equity security representing the ownership
interest in a corporation
Book value
Dividend, dividend yield,
Payout ratio
P/E ratio
 Stock dividend and stock split

12. Derivative Securities,
Derivative Securities,
 Securities that derive their value and whole or in
part by having a claim on some underlying security
Warrant.
Options, put, call, LEAPS
 Futures Contracts,
Agreement providing for the future exchange of a
particular asset at a currently determined market
price