Page 5 - FINAL CFA SLIDES DECEMBER 2018 DAY 13
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LOS 44.b: Describe classifications of Session Unit 13:
assets and markets., p.191
44. Market Structure & organisation
Financial assets Securities (stocks and bonds), derivative contracts, and currencies
Financial securities • Debt securities are promises to repay borrowed funds.
• Equity securities represent ownership positions
Real assets • Real estate, equipment, commodities, and other physical assets
Public (publicly traded) v • Public =Traded on exchanges (via brokers and dealers) and subject to regulatory
private securities oversight
• Private = not traded on exchange, illiquid and not subject to regulation
tanties
Derivative contracts • Financial derivatives – based on equities, equity indexes, debt, etc.
• Physical derivative –based say gold, oil, and wheat.
Spot versus future markets • Spot markets –for immediate delivery
• Future markets – for future delivery, e.g. forwards, futures, options.
Primary versus secondary • Primary –for newly issued securities,
markets • Secondary – for subsequent sales of securities
Money versus capital • Money market –for debt securities with maturities of less than a year
markets • Capital –for debt and equity securities with no specific maturity.
Traditional investment • Traditional – for debt and equity
markets versus alternative • Alternative -hedge funds, commodities, real estate, collectibles, gemstones, leases,
investment markets and equipment. Alternative assets are often more difficult to value, illiquid, require
investor due diligence, and therefore often sell at a discount.
