Benefits of international investing
International investing provides the investor with more
opportunities to include in investment portfolio. Many of those opportunities
may not be available for those who solely invest in the domestic market. For
instance, some industries are restricted to some countries making it worthwhile
to take an international approach so as to gain from those industries.
Money Market Securities
Are securities issued to secure short term financing
either by government units or corporations. They mature within one year hence
the fact that they trade in money markets. A treasury bill issued by the
federal government is an example of a money market security. On their part,
corporations can issue commercial papers.
Municipal Bonds
Are debt securities issued by state and local units of
government. They may be short term or long in which case they trade in money or
capital markets respectively.
Closed-end investment company
An investment fund that only issues shares once with no
further opportunities for continuous issuance. In addition, the fund does not
redeem shares from investors.
Mutual Funds
They are open investment vehicles in the sense that they
continue to issue and redeem shares during the life of the fund. The only
disadvantage is that these funds do not allow their ownership shares to trade
in the secondary market.
Exchange Traded Funds
Shares in these funds are issued in blocks and those
holding a block can sell portions or even the whole block. A portion of a block
can also trade in the secondary market.
Dow Jones Industrial Average
It is a stock market index that monitors the performance
of 30 most important companies in the stock market.
Cash Account
A brokerage account that only allows an investor to make
cash payments for securities purchased. In the event that payment is not made
immediately, then the account requires that the same is made as soon as
possible.
Margin trading
A kind of trading where an investor can borrow money from
their broker-dealer to execute a trade.
Holding a margin account is the opposite of cash account.
Limit Order
An order specifying that a sale or purchase should only
be filled at a given price or one that is better than the one specified. Limit
orders helps preserve value for an investor.
Short Selling
A trading strategy where the trader makes profits by
anticipating future drops in the price of the traded item whether it is a
security or a commodity. They then borrow it at a high price with the intention
to buy when the price is low.
Geometric Mean
It is calculated by multiplying the numbers for which the
mean is to be established and then raising the product of that multiplication
to the base of the reciprocal of all the items. It eliminates the variability
that is characteristic of the arithmetic mean.
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