FINANCIAL ASSETS: STOCK, INDICES AND BONDS
In this session we will look at the financial assets that is what they are and we will focus on three of them as are stocks indexes and bonds financial assets are those products that we are going to buy or sell if we are going to devote to The investment in financial assets which are the most important as the stock indices the bonds the currencies and the financial derivatives are not the only ones but that they are the ones that are more negotiated in the markets and those that we are going to focus in this course Introductory perhaps the most well-known financial assets are actions in fact when you think of investing in financial assets you immediately think of investing in the stock market and specifically in stocks as well as they are the stocks and how you can make money by investing in them The companies when they need to finance their growth for example as one of the options they have to get funds from abroad is through the issuance of shares the shareholder is the person who buys the shares because it becomes the owner usually a small owner of the company And has a series of rights of which the most interest to us is the right to receive dividends which is when the company has profits and divides it among the shareholders then to the now to decide what assets we are going to buy as we are interested to know The dividends in the case of the shares but not only that way of obtaining profitability from the purchase of shares.
But we can also obtain this profitability from the revaluation of the shares ie we buy at a price and sell them in the future at a higher price depending on our investment profile as we give more weight to the analysis of dividends Or the revaluation and depending on our investor profile because for example we are long or short term investors because we will design some strategies to see what actions we are going to invest together with the shares as we have the option of investing in indexes as we know all dowjones , The SP500, nasdaq ibex thirty five euros fifty and these indexes that is what they are because they are not stocks as the indices what they are chasing is to explain to us what is the general movement of the market what the general feeling of the market.
If the market goes up or the market goes down not only seeing an action but seeing a set of those actions that are the most important that actions are the most important as well usually those companies that have a greater capitalization are usually selected ie the ones that are bigger And also have greater liquidity in the market is to say that are those stocks that are bought and sold more good because all markets at an international level because they have their benchmark index investing has the advantage versus investing in individual stocks in which In the long term since they present an upward trend and also allow us to diversify more than buying only one option we have seen that the indices are composed of different actions in this case are shares of different sectors with which as we are more diversified we have less risk than if we compare Only an action that obviously belongs to a company in a particular sector which is a good option to invest long term well and what we do if we want to follow an index as we can invest in such a way that it is the index rise as I I have a good positive profitability as until relatively recently the main option was to make a replication the replication can be a total replication or a partial replication the total replication is when I buy each and every one of the actions that make up the index such as in The transparency we see the components of the dow thirty and we would have to buy all those shares in the same proportion in which they are in the index in the case of the dow that the companies with each one has a thirty part of the weight of the clear index that would suppose Buy thirty shares that that can generate us a series of expenses in commissions of deposits and other against this option is the partial replica by means of which using mathematical models we select a few companies of the index we give weight in our own index our retort and we will obtain A profitability similar to that obtained by the reference index in this way as we saved costs these were the unique options that had until relatively recently and now we can also invest in the options that are the most common the most popular such as Cfd and the etfs etf are quoted funds cfd as they can be bought and sold as if they were shares but to be also derivative instruments as they have an additional problem or finally in this prese.
In fact, companies not only issue shares but what really funds their growth are fixed income issues and that is the good fixed income as a company when it needs to raise money creates a bond an obligation and sell the market and then those People who buy that bond because they have the right to the company to return the money plus interest with which you can know beforehand which are going to be the cash flows that money will generate me having bought that bonus That is why it is denominated fixed income against the equity that are the shares in which case we do not know in advance what will be the dividends that we are going to charge in type of bonds that denominated generically than the fixed income because we have the letters And promissory notes are short-term bonds and long-term bonds, for example, there are obligations that are perpetual to say that not that never wins and how we obtain profitability by buying fixed income good since we have already commented that we have the interests that I They have to pay me for buying bond but we also have the possibility of revaluation of the bond bonds once they are issued in the primary market can be traded in the secondary market just as with the stock is something to be taken into account Being a product that can be traded in the secondary market its price depends on the supply and demand is to say that the price of a bond can rise and may fall this is important to take into account because many times many times people who believe Investing a fund of fixed income as it is fixed income I can not lose money not that is not the case if I have a bond I buy it and I keep it until the expiration I know perfectly what the profitability will be but if I dedicate to buy or Sell in the secondary market because then I can also make more money but I can lose it with which if I dedicate myself to investing bonds I can also design investment strategies.
To buy bonds at a cheap price and sell them at a higher price of what depends on the bond to rise in value or decline in value in the secondary market as always as the supply and demand and expectations of the evolution that depends on Instead of macroeconomic factors of political factors and that is related mainly because the stock market with the evolution of interest rates with credit risk is the possibility that the issuer of the bond does not return the money and the evolution of investments Alternatives must also be taken into account that in the case of bonds are not only the companies that emit them but also and those who have a very large specific weight in this market are the states any case you have to design investment strategies Based on fundamental analysis good technical analysis when planning the investments in this asset as well as in other assets well in this way as we finished the presentation of this section on financial assets in which we talked about the actions of Indices and bonds.