In the context of investing, "equity," or equities, refers to stocks, and "fixed income" refers to bonds or cash investments.

The two types of investments tend to behave differently under the same market conditions, providing investors an important form of diversification. Because of their different risk profiles, investors can benefit by putting some money in both types of investments.

1. Equity
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If you own a home, you already understand the principle of equity, which represents the value of your home above and beyond any loan against it. If you own a stock, you also own equity, but in a company. Just like your the value of your house, the value of your stock can go up or down depending on what someone else will pay for it. Though analysts might apply standards by which a stock is valued, the market will ultimately determine its price. Deferred share private propraitoryship Equity share

Fixed Income
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Fixed-income investments provide the investor with a fixed rate of interest, or return. Unlike a mortgage, on which you pay both interest and principal, the borrowing company typically pays only interest until "maturity," the date the loan comes due. Just as your good credit rating might qualify you for a lower interest rate on your loan, so companies with high ratings get to offer lower interest rates on their debt. Poorly rated companies must pay higher interest to compensate for their greater default risk.

Differences
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Over the long term, stocks tend to move up; the S&P 500 Index, an index of large-company stocks, returned 10.4 percent a year on average from 1989 to 2008. However, stocks are volatile, meaning their value can swing widely in the short term. As an example, one year during that period, the index had negative returns of 37 percent. By contrast, fixed-income investments offer decreased volatility but lower returns. Over that same period, the U.S. Aggregate Bond Index returned 7.6 percent a year on average, with a worst-year negative return of 2.9 percent.

Types
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Some investments look the same on the outside but are different inside. Equities come in several flavors. Single stocks, exchange-traded funds or ETFs, and mutual funds are the most common vehicles for equity or stock ownership. For fixed-income investments, look for bonds (corporate, municipal and federal) and CDs, but they can also be found as ETFs and mutual funds. Be sure to understand the composition of an ETF or mutual fund before investing in it, since fixed income and equities can be found in both.

Expert Insight
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You can allocate your money between equity and fixed income investments to achieve a balance between how much risk you are willing to take and how much growth you want. You can even achieve this balance with only one mutual fund or ETF investment. By allocating your money in this way you achieve the twin goals of diversification, or not putting all your eggs in one basket, and growth with lower volatility (see Resources section).

Fixed Income
What Does Fixed Income Mean? A type of investing or budgeting style for which real return rates or periodic income is received at regular intervals at reasonably predictable levels. Fixed-income budgeters and investors are often one and the same - typically retired individuals who rely on their investments to provide a regular, stable income stream. This demographic tends to invest heavily in fixed-income investments because of the reliable returns they offer. Investopedia explains Fixed Income Individuals who live on set amounts of periodically paid income face the risk that inflation will erode their spending power. Fixed-income investors receive set, regular payments that face the same inflation risk. The most common type of fixed-income security is the bond; bonds are issued by federal governments, local municipalities or major corporations.

What Does Equity Mean? 1. A stock or any other security representing an ownership interest. 2. On a company's balance sheet, the amount of the funds contributed by the owners (the stockholders) plus the retained earnings (or losses). Also referred to as "shareholders' equity". 3. In the context of margin trading, the value of securities in a margin account minus what has been borrowed from the brokerage. 4. In the context of real estate, the difference between the current market value of the property and the amount the owner still owes on the mortgage. It is the amount that the owner would receive after selling a property and paying off the mortgage. 5. In terms of investment strategies, equity (stocks) is one of the principal asset classes. The other two are fixed-income (bonds) and cash/cash-equivalents. These are used in asset allocation planning to structure a desired risk and return profile for an investor's portfolio.

Investopedia explains Equity The term's meaning depends very much on the context. In finance, in general, you can think of equity as ownership in any asset after all debts associated with that asset are paid off. For example, a car or house with no outstanding debt is considered the owner's equity because he or she can readily sell the item for cash. Stocks are equity because they represent ownership in a company. Read more: http://www.investopedia.com/terms/e/equity.asp#ixzz1ZFggL2Rp What Does Mutual Fund Mean? An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by money managers, who invest the fund's capital and attempt to produce capital gains and income for the fund's investors. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus.

A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests typically in investment securities (stocks, bonds, short-term money market instruments, other mutual funds, other securities, and/or commodities such as precious metals).

Investopedia explains Mutual Fund One of the main advantages of mutual funds is that they give small investors access to professionally managed, diversified portfolios of equities, bonds and other securities, which would be quite difficult (if not impossible) to create with a small amount of capital. Each shareholder participates proportionally in the gain or loss of the fund. Mutual fund units, or shares, are issued and can typically be purchased or redeemed as needed at the fund's current net asset value (NAV) per share, which is sometimes expressed as NAVPS What Does Bond Mean? A debt investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate. Bonds are used by companies, municipalities, states and U.S. and foreign governments to finance a variety of projects and activities. Bonds are commonly referred to as fixed-income securities and are one of the three main asset classes, along with stocks and cash equivalents.. Fixed

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Investopedia explains Bond The indebted entity (issuer) issues a bond that states the interest rate (coupon) that will be paid and when the loaned funds (bond principal) are to be returned (maturity date). Interest on bonds is usually paid every six months (semi-annually). The main categories of bonds are corporate bonds, municipal bonds, and U.S. Treasury bonds, notes and bills, which are collectively referred to as simply "Treasuries". Two features of a bond - credit quality and duration - are the principal determinants of a bond's interest rate. Bond maturities range from a 90-day Treasury bill to a 30-year government bond. Corporate and municipals are typically in the three to 10-year range. What Does Institutional Investor Mean? A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. Institutional investors face fewer protective regulations because it is assumed that they are more knowledgeable and better able to protect themselves.
Institutional Investors are investors (either individuals or companies) that make large enough purchases to benefit from reduced commissions preferential regulations. The SEC defines institutional investors based on the level of the investors' assets. For organizations or businesses, this means having more than $5 million in assets at the time of purchase, while individuals are required to have greater than$1 million in assets at the time of purchase. Because they are considered to be professional investors, institutional investors are not subject to the same regulations as retail investors. Some examples of institutional investors include pension funds, life insurance companies, investment trusts, and hedge funds

Investopedia explains Institutional Investor Watching what the big money is buying can sometimes be a good indicator, as they (supposedly) know what they are doing. Some examples of institutional investors are pension funds and life insurance companies. What Does Portfolio Management Mean? The art and science of making decisions about investment mix and policy, matching investments to objectives, asset allocation for individuals and institutions, and balancing risk against. performance. Portfolio management is all about strengths, weaknesses, opportunities and threats in the choice of debt vs. equity, domestic vs. international, growth vs. safety, and many other tradeoffs encountered in the attempt to maximize return at a given appetite for risk.

Investopedia explains Portfolio Management In the case of mutual and exchange-traded funds (ETFs), there are two forms of portfolio management: passive and active. Passive management simply tracks a market index, commonly referred to as indexing or index investing. Active management involves a single manager, co-managers, or a team of managers who attempt to beat the market return by actively managing a fund's portfolio through investment decisions based on research and decisions on individual holdings. Closed-end funds are generally actively managed

What is three equity security data points High, Low, & Closing

Fixed-Income Security
What Does Fixed-Income Security Mean? An investment that provides a return in the form of fixed periodic payments and the eventual return of principal at maturity. Unlike a variable-income security, where payments change based on some underlying measure such as short-term interest rates, the payments of a fixed-income security are known in advance. Investopedia explains Fixed-Income Security An example of a fixed-income security would be a 5% fixed-rate government bond where a $1,000 investment would result in an annual $50 payment until maturity when the investor would receive the $1,000 back. Generally, these types of assets offer a lower return on investment because they guarantee income.

Net Worth
What Does Net Worth Mean? The amount by which assets exceed liabilities. This term can be applied to companies and individuals. Investopedia explains Net Worth For a company, this is known as shareholders' (or owners') equity and is determined by subtracting liabilities on the balance sheet from assets. For example, if a company has $45 million worth of liabilities and $65 million in assets, the company's net worth (shareholders' equity) is $20 million ($65 million - $45 million). Alternatively, let's say an individual has only three assets, $100,000 of common

stock, $30,000 worth of bonds and title to a $190,000 house. Conversely they have only one liability, $150,000 owing on their mortgage. The individual's net worth would be $170,000 ([$100,000 + $30,000 + $190,000] - [$150,000]).

1. For a company, total assets minus total liabilities. Net worth is an important determinant of the value of a company, considering it is composed primarily of all the money that has been invested since its inception, as well as the retained earnings for the duration of its operation. Net worth can be used to determine creditworthiness because it gives a snapshot of the company's investment history. also called owner's equity, shareholders' equity, or net assets. 2. For an individual, the value of a person's assets, including cash, minus all liabilities. The amount by which the individual's assets exceed their liabilities is considered the net worth of that person. Read more: http://www.investorwords.com/3267/net_worth.html#ixzz1adC4Gasz

Index
What Does Index Mean? A statistical measure of change in an economy or a securities market. In the case of financial markets, an index is an imaginary portfolio of securities representing a particular market or a portion of it. Each index has its own calculation methodology and is usually expressed in terms of a change from a base value. Thus, the percentage change is more important than the actual numeric value. Stock and bond market indexes are used to construct index mutual funds and exchange-traded funds (ETFs) whose portfolios mirror the components of the index.

where: Current market capitalization = Sum of (current market price * outstanding shares) of all securities in the index. Base market capitalization = Sum of (market price * issue siz e) of all securities as on base date.

Investopedia explains Index The Standard & Poor's 500 is one of the world's best known indexes, and is the

most commonly used benchmark for the stock market. Other prominent indexes include the DJ Wilshire 5000 (total stock market), the MSCI EAFE (foreign stocks in Europe, Australasia, Far East) and the Lehman Brothers Aggregate Bond Index (total bond market). Because, technically, you can't actually invest in an index, index mutual funds and exchange-traded funds (based on indexes) allow investors to invest in securities representing broad market segments and/or the total market.

Mortgage
What Does Mortgage Mean? A debt instrument that is secured by the collateral of specified real estate property and that the borrower is obliged to pay back with a predetermined set of payments. Mortgages are used by individuals and businesses to make large purchases of real estate without paying the entire value of the purchase up front. Mortgages are also known as "liens against property" or "claims on property". Investopedia explains Mortgage In a residential mortgage, a home buyer pledges his or her house to the bank. The bank has a claim on the house should the home buyer default on paying the mortgage. In the case of a foreclosure, the bank may evict the home's tenants and sell the house, using the income from the sale to clear the mortgage debt.

Corporate actions are typically agreed upon by a company's board of directors and authorized by the shareholders. Some examples are stock splits, dividends, mergers and acquisitions, rights issues and spin offs. Let's take a closer look at these different examples of corporate actions. Read more: http://www.investopedia.com/articles/03/081303.asp#ixzz1ad6zqzOj

Types Of Corporate Actions Corporate actions are classified as mandatory, voluntary and mandatory with choice corporate actions.

Mandatory Corporate Action: A mandatory corporate action is an event initiated by the corporation by the board of directors that affects all shareholders. Participation of shareholders is mandatory for these corporate actions. Mandatory Corporate Actions Includes Cash Dividend, Stock Splits, Mergers, Pre-refunding, Return of capital, Bonus Issue, Asset ID Change, Paripassu and Spinoffs. Stock Split and Reverse Spilt: A corporate action in which a companys existing shares are divided into multiple shares. For Ex. A company with 100 shares of stock price Rs 50 per share (100*50 = 5000). The company splits it shares 2 for 1. There are now 200 shocks for Rs 25 each (200*25 = 5000) . The reason why companies split their stock is to make them more affordable to investors because stock price reduces after it is split. Likewise, reverse split increases the stock price while reducing number of outstanding shares. Spin-Offs: Spin off means a company breaking up itself into smaller units. The creation of an independent company through the sale or distribution of new shares of an existing business/division of a parent company. Dividend Payouts: Dividend is the payment made to the investor for sharing the profits a company has made. Mergers and Acquisitions: Mergers is a event where two or more companies merge into one aiming to be more competitive and for more profitability. Likewise Acquisition means a bigger company acquiring a smaller one for further expansion. Bonus Issue: It is an additional dividend given to the shareholders that can be in cash or in the form of stock. When companies have outstanding performance with surplus profit, they may decide to issue bonus to the shareholders. Voluntary Corporate Action : Voluntary corporate actions, are actions requiring a decision from the investor on whether or not to participate. Corporation will not process these actions automatically because the decision on whether to participate will vary for every investor. Shareholders may chose to take no action which will leave their securities unaffected by the Corporate Action. Voluntary corporate action includes Tender Offer, Rights issue, Making buyback

offers to the share holders while delisting the company from the stock exchange etc. Buyback: Buyback is an action in which company offers to buys back its stock from the current share holders at an attractive price. The reason is to reduce the shares outstanding in the market or to reduce the stake of shareholders in company. Rights Issue: It refers to offering additional shares to the current shareholders of the stock. This is done by companies to raise capital for further expansion which provide its existing shareholders the right to buy the stock at discounted rates than price making it more lucrative. Mandatory With Choice Corporate Action : This corporate action is a mandatory corporate action for the shareholder but they are being presented with options. An example is cash or stock dividend option with one of the options as default. Share holders may or may not submit their elections. In case a share holder does not submit the election, the default option will be applied. Dividend Payouts: Dividend is the payment made to the investor for sharing the profits a company has made. It can be cash dividend or stock dividend where company offers stock as a dividend to the current shareholders.

By

"money left on the table," bankers mean that the company

could have successfully completed the offering at a higher price, and that the difference in valuation thus goes to initial investors rather than the company. Why this happens and when it will happen is not easy to predict from responses received from investors during roadshows. Moreover, if the stock rises a lot the first day it is good publicity for the firm. But in many ways it is money left on the table because the company could have sold the same stock in its initial public offering at a higher price. However, bankers must honestly value a company and its stock over the long-term, rather than simply trying to guess what the market will do. Even if a stock trades up significantly initially, a banker looking at the long-term would expect the stock to come down, as long as the market eventually correctly values it.

3types of equity securities COMMON STOCK PREFFERED STOCK AMERICAN DEPOSITARY RECEIPT

A stockbroker is the person responsible for buying and selling a client's shares in stock. The client can be an individual, stock brokerage company or an investment management company. Essentially, the main goal of a stockbroker is to make the most profitable decisions possible, but this must be done ethically and within the duties a stockbroker is responsible for fulfilling.

Fair Dealing

The National Association of Securities Dealers uses the following as a standard of fair dealing, "A member, in the conduct of his business, shall observe high standards of commercial honor and just and equitable principles of trade." To abide by this standard, a stockbroker must abide by all pertinent rules and laws and treat clients in an honest fashion.

Loyalty

The responsibility to be loyal means exactly what it sounds like - a stockbroker must always make the client's interest paramount. The interest of the stockbroker, the brokerage company, or any other entity is secondary. The stockbroker is hired to perform in a manner consistent with what her clients want.

Disclosure

A stockbroker must disclose all information that may be vital to an investment decision. This type of information is called "material information." Material information must be relayed to clients so an informed decision can be made on whether to buy, sell or do nothing. Also encompassed in the responsibility to disclose material information is the responsibility to have honest communications with clients at all times.

Authorized Trading

A stockbroker cannot act on his own. He must have the permission from his clients to buy, sell or trade stock. As such, the only time a stockbroker can perform any of these functions is when he is authorized to do so by the client.

Suitable Recommendations

The responsibility to give suitable recommendations is also referred to as the "know your client" rule. In short, a stockbroker can only suggest trading, buying and selling stock that is in line with the type of risks her clients usually take and in line with how

much money the clients actually have invested. For example, a stockbroker probably would not suggest the same investment opportunity to a young married couple that has just started investing that he just gave to a rich individual with decades of investment experience. The investment must match the client.

Special Situations

Some situations require a heightened level of responsibility or may subjugate the stockbroker to responsibilities to other parties. One such situation is when a client trades with money from the brokerage firm ("trading on the margins"). This type of trading is heavily regulated and requires the stockbroker to have some responsibilities to the brokerage firm that may be at odd with the interests of the client.

Good Faith

Stockbrokers have a responsibility to act in good faith towards their clients. This is an all-encompassing responsibility that requires a stockbroker to be open, honest, and trustworthy when interacting with clients. A client places a vast amount of trust and money in a stockbroker's hands. These must be treated with a great amount of care. The main goal of a stockbroker is to produce gains through intelligent investment recommendation Read more: Responsibilities of a Stockbroker | eHow.com http://www.ehow.com/list_6506273_responsibilitiesstockbroker.html#ixzz1adA0DOVL

Read more: Responsibilities of a Stockbroker | eHow.com http://www.ehow.com/list_6506273_responsibilities-stockbroker.html#ixzz1ad9qmX1F

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