Investment Type
Generic Information on Investment/Financial
Products
1.Types of Investment funds Open/closed ended
Fund Money Market Fund Bond Fund International Bond Fund High
Yield Bond Fund Emerging Market Bond Fund Equity Fund Global
Fund Regional Fund Single Market Fund Theme Fund Capital
Guaranteed Fund Hedge Fund
2-1 Common Stock Common shares represent ownership of a
company. As owners, common shares normally have the right to elect
directors and to vote on certain major corporate decisions. They are also
entitled to share in any residual assets of the company if it is wound
up. Common shares are normally traded on stock exchanges, ATS or in
over-the-counter markets between dealers. For some common shares however
there may be little or no market and/or the shares may be subject to
restrictions on resale.
2-2 Restricted Voting Shares Restricted voting shares
represent ownership, like common shares, but offer holders restricted or
no
2-3 Preferred Shares Preferred shares typically give
holder the right to receive a fixed dividend before any dividends can be
paid to the company's common shareholders. Preferred shareholders are also
entitled to a portion of the residual assets of the company if it is wound
up. Holders often do not have voting rights, but in many cases are offered
special features such as the right to redeem their shares at certain times
or convert them into common shares at a predetermined price.
3 Fixed-income securities
3-1 Bonds Bonds are evidence of a loan by the investor
to the government or company that issues the bond. The issuer generally
promises to pay a specified rate of interest to the bondholder and to
repay a certain amount (the face value of the bond) at maturity. Bonds may
be sold at prices higher or lower than their face value. Corporate bonds
are typically secured by a pledge of specific assets. Some bonds offer
holders the right to convert their bonds into common shares.
3-2 Debentures Debentures are similar to bonds, but
typically not secured by the pledge of specific corporate assets. They
may, however, be secured by a 'floating charge' on the issuer's assets
generally.
3-3 Treasury Bills (T-bill) Treasury bills are
short-term (less than one year to maturity) debt securities issued by the
federal and some provincial governments. They do not pay interest but
instead are sold at a price below their value at maturity. T-bills are
issued by the government regularly and are typically sold in large
denominations.
4 Unit Trust Unit trust represents interests in the net
assets and net income of a trust. These trusts are generally set up to
invest in assets such as real property (real estate investment funds),
royalties from oil and gas production (royalty trusts) or the income
generated from one or more businesses (income trusts). Many are designed
to offer tax advantages to investors.
5-1 Options Options are securities that give the holder
the right to buy (a 'call' option) or sell (a 'put' option) an asset at a
specific price for a specific period of time. Many options on common
shares, other financial products and commodities are traded on exchanges.
The holder of an exchange-traded option may sell it, exercise it to buy
the underlying asset or let it expire.
5-2 Warrants Warrants give the holder the right to
acquire other specified securities at a specified price for a specified
time. They are typically offered to investors in conjunction with the sale
of another security, like a common share.
5-3 Rights In the rights offering a company gives its
shareholders the right to buy additional shares from the company at a
specified price within a specified period of time. Rights are issued in
proportion to the number of shares already owned by each
shareholder.
6 Futures Futures contracts are agreements in which the
seller agrees to deliver to the buyer a specified quantity of an asset at
a specified price on a given date. Exchange-traded futures contracts trade
on standardized terms and transactions are settled by a clearing
agency. Common shares are normally traded on stock exchanges, ATS or in
over-the-counter markets between dealers. For some common shares however
there may be little or no market and/or the shares may be subject to
restrictions on resale.
7 FOREX Foreign exchange, forex or just FX are all
terms used to describe the trading of the world's many currencies. The
forex market is the largest market in the world, with trades amounting to
more than USD 1.5 trillion every day. This is more than one hundred times
the daily trading on the NYSE (New York Stock Exchange). Most forex
trading is speculative, with only a few percent of market activity
representing governments' and companies' fundamental currency conversion
needs. Unlike trading on the stock market, the forex market is not
conducted by a central exchange, but on the ginterbankh market, which is
thought of as an OTC (over the counter) market. Trading takes place
directly between the two counterparts necessary to make a trade, whether
over the telephone or on electronic networks all over the world. The main
centres for trading are Sydney, Tokyo, London, Frankfurt and New York.
This worldwide distribution of trading centres means that the forex market
is a 24-hour market.
Trading Forex
A currency trade is the simultaneous buying of one
currency and selling of another one. The currency combination used in the
trade is called a cross (for example, the Euro/US Dollar, or the GB
Pound/Japanese Yen.). The most commonly traded currencies are the
so-called gmajorsh Π EURUSD , USDJPY , USDCHF and GBPUSD . The most
important forex market is the spot market as it has the largest volume.
The market is called the spot market because trades are settled
immediately, or gon the spoth. In practice this means two banking
days.
Trading on Margin
Trading on margin means that you can buy and sell assets
that represent more value than the capital in your account. Forex trading
is usually conducted with relatively small margin deposits. This is useful
since it permits investors to exploit currency exchange rate fluctuations
which tend to be very small. A margin of 1.0% means you can trade up to
USD 1,000,000 even though you only have $10,000 in your account. A margin
of 1% corresponds to a 100:1 leverage (or 'gearing'). (Because USD 10,000
is 1% of USD 1,000,000.) Using this much leverage enables you to make
profits very quickly, but there is also a greater risk of incurring large
losses and even being completely wiped out. Therefore, it is inadvisable
to maximise your leveraging as the risks can be very high.
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(Thailand) Company, Ltd. 2012 |