section 1 - The American College Online Learning Center

. Dollar-denominated liabilities of banks located outside of the U.S., usually Europec. Slightly higher than other money market ratesd. Less regulatory constraints on these banksLO 7-1-2: Using investments in stocks in retirement income planning1. Differentiating stocks by attributea. Growthb. Incomec. Value(1) Net income goes to one of two places — retained earnings or dividends.(2) Pays little or no money out to shareholders in the form of a dividend(3) Shareholders realize returns as capital gains when stocks are sold.(1) Shareholders receive an income stream from the shares in the form ofquarterly cash dividends.(1) Value stocks are considered to be undervalued by the market. Valueinvestors hope to buy cheap and realize excess returns when the marketrecognizes the stock’s true value.d. Market capitalization (share price X shares outstanding)(1) No hard and fast definitions but…(a) Large-cap stocks(a) Over $10 billion(b) Mid-cap stocks(a) $2 billion – $10 billion(b) Small-cap stocks(a) $300 million – $2 billion(b) Historically, small cap stocks have been more volatile thanmid- and large-cap stocks and less liquid.(2) Free float and market capitalizatione. Stock’s beta(a) Some stock market indexes, like the S&P 500, only consider sharesthat are free to trade in the market capitalization measure. Called“free float,” it is a measure of the publicly available shares.(1) A stock’s beta is the measure of its market specific risk. The overall markethas a beta of 1 by definition.f. International equities(1) Benefits(a) Low beta stocks are considered more conservative investments.(b) High beta stocks are considered more aggressive investments.(a) International diversification(b) Growth prospects in foreign economies7.4