Securities are financial assets that give holders ownership or creditor rights in a particular organization. The word usually refers to stocks (also sometimes called equities), but there are other types of securities that can be bought and sold on the open market, including bonds and mutual funds. Commodities are tangible products—usually raw materials—that are bought and sold in bul…
Thanks to retirement investment options including 401(k) plans—funds that workers can contribute to on a before-tax basis and that grow tax-free until the money is withdrawn—a large percentage of Americans are now stock-market investors. As of 2001, 21.3% of Americans held stocks directly, 17.7% were invested in mutual funds, and 52.2% had retirement accounts (many of which include s…
Prices of stocks, bonds, and commodities fluctuate naturally, which generally is not cause for concern. However, when fluctuations are created as a result of greed or corruption, or by the creation of artificial and unsustainable conditions, the results can be disastrous. Such was the case in 1929, when the market crashed and ushered in the period known as the Great Depression, which lasted until …
Even with careful oversight, fraudulent activities are common in the securities industry. In 2004 the SEC received 8,722 complaints from investors, up from 6,384 in 2003 (2003 figures are lower in part because data on e-mail and fax spam was not kept that year). The number of complaints of misrepresentation of company disclosures decreased 30.22% from 2003 to 2004; complaints involving theft of fu…
The price of a given security or commodity is largely a function of its potential profit and risk; and, theoretically at least, the relationships among price, risk, and expected profit behave in fairly predictable ways. For example, bond prices will tend to rise when overall interest rates go down. But there are much less predictable forces at work as well. Changes in consumer or investor confiden…
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