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SIE final review 1 - Coggle Diagram

- - - - rights offerings
      - Rights are issued at a discount (below the market price)
      - Short-term privileges granted to existing shareholders
    - - Exercise price is set above the market price at issuance
      - Long-term “sweeteners” often attached to bonds or preferred stock to make them more attractive
  - - - US gov
        
        T bills: short term, money market instrument, matures in less than 12 months, issued at discount, no stated interest : (return = difference between purchase & par), No credit risk (backed by U.S. gov’t), no interest rate risk (very short-term).
        
        T-Notes & T-Bonds: Longer maturity (Notes: 2–10 yrs; Bonds: 10+ yrs), Pay interest semiannual, Risks: Interest rate risk (longer-term), No credit risk (still U.S. gov’t) / quoted as a percentage of par $1000, broken into 32nds of a point
        
        Treasury STRIPS ( zero coupon, Imputed interest = taxable as ordinary income/ Treasury recepits
      - Municipalities
        
        General Obligation (GO) Bonds: Backed by taxing power of the municipality, Often require voter approval.
        
        Revenue Bonds: Backed by project revenues/fees (e.g., toll roads, airports), Do not need voter approval.
        
        Often tax free at federal level
        
        Tax−FreeYield÷(1−TaxBracket)=TaxableEquivalentYield
        
        Use to compare muni bonds (tax-free) vs. corporates/treasuries (taxable).
      - Corporate issuers
        
        secured bonds, collateral trust bonds, equipment trust certificates, unsecured debt (debentures...), income adjustment bonds
        
        Seniority Ranking: Secured → Unsecured → Preferred Stock → Common Stock
    - - Term Bonds
      - Serial Bonds
      - Balloon Bonds
    - - Most issuers want to reserve the right to call the bonds / but there is a call protection
      - Convertible
      - Zero coupon bonds (bought at a discount)
    - - CY
      - people buy bonds based on YTM and YTC
- - - - Registration staement
      - unregistered
        
        issuers that don't need
      - Private placement
        
        Red D
        
        506 C - transaction only to a acredited investor
        
        def of acredited investor: 1Mil net worth without primary residence / or 200k in annual income/ 300 k per married couple
      - Initial Public Offering (IPO)
      - Shelf Offering: a company registers securities in advance and sells portions over time, max 3 years
        
        use for additional Pu offering
  - - - Market makers and dealers
        
        NASDAQ stock is a market maker
      - all debt securities deal here
      - Foreign trade
  - - - PIPE = Private Investment in Public Equity
  - - - Type of carrying: Prime brokers often itself a large carrying firm, but with an added layer of services designed for hedge funds and institutional clients.
- - - - Supply-Side Theory (Counter to Demand-Side / Manside): if you leave more resources with consumers and businesses (via lower taxes and fewer regulations), they’ll invest, produce more, and hire workers
    - - Easy Money Policy / 2. Tight Money Policy
  - - - Discount Rate (Fed → banks) is usually a little higher than the Fed Funds Rate to discourage overreliance on Fed borrowing
    - - Fed Funds Rate (benchmark)
    - - Broker’s Call Rate floats above the Fed Funds Rate, since banks pass along higher costs when lending to brokers.
    - - Prime Rate is the consumer-facing rate