Investment and Finance

CD's are Certificate of Deposits which are a form of short term investments that offers a high degree of safety and negotiability. Negotiable Certificates of Deposits are negotiable instruments representing specific cash deposits in commercial banks having varying maturities and yields based on size maturity and prevailing money market conditions. Yields are generally above those on U.S. Treasury issues and comparable to those on commercial paper with similar maturities.

Preferred stock gives its shareholders certain privileges that make them senior to common shareholders.
Preferred stockholders are promissed a fixed periodic return which is stated as a dollar amount or a percentage.
Preferred stockholders are given preference over common shareholders with respect to distribution of earnings.

Marketable securities are short term debt instruments such as U.S. Treasury bills, commercial paper and negotiable certificates of deposit issued by financial institution, business, or government.

Securities exchanges are tangible institutions that act as secondary market in which outstanding securities are resold. Securities exchanges are called "stock markets", provide the marketplace in which firms can raise funds through the sale of new securities and purchasers of securities can maintain liquidity by being able to easily resell them when necessary.
Although called stock markets, bonds, preferred and common stock and other investment vehicles are all traded on theses exchanges.
The 2 types of security exchanges are the Organized Exchange and the Over the Counter Exchange. The most used organized exchanges are the (NYSE)New York Stock Exchange and the (AMEX)American Stock Exchange both located in New York City.
The New York stock exchange is also known as the Big Board. More than 2,000 common and preferred stocks are traded here. The New York Stock Exchange is the oldest in the United States. It was founded in 1792, and is the largest.
It is located on Wall Street in New York City. Other regional exchanges are the Midwest Stock Exchange in Chicogo and the Pacific Stock Exchange in San Francisco California.
Trading is carried out on the floor of the exchange through an auction process. The goal of stock trading is to fill buy orders at the lowest price and fill the sell orders at the highest price.

The bid price is the highest price offered by a dealer to purchase a given security. The ask price is the lowest price at which a dealer is willing to sell the security. The dealer adds securities to his or hers inventory by purchasing them at the bid price and sells securities from inventory at the ask price. A profit will occur from the difference between the bid and ask price.

Commercial paper is a short term unsecured promissory note issued by a corporation that has a very high credit rating. The yield usually is more than that paid on U.S. Treasury issues and similar to those available on negotiable CD's with similar maturities. The commercial paper notes are usually issued in multiples of $100,000. The commercial paper notes usually have maturities from 3 to 270 days.

A dynasty trust is a trust which avoids estate taxes because the rule of perpetuities does not apply. Most states limit trusts to 100 years. Thirteen states including New Jersey, Wisconsin, Idaho, Rhode Island now allow a trust to span beyond that period.

Favorable lower capital gains tax rates are available if a portion of your Taxable Income consists of "Net Capital Gains".
Net capital gains are your net LONG term capital gains in excess of net short term capital losses.
Your short term stock gain would not qualify as a lomg term Net capital gain.
The portion of the short term gains will be taxed as ordinary income at the tax bracket your taxable income falls in to.

Risk in the most basic sense is the chance of financial loss. Inflation erodes your purchasing power. Inflation risk is the chance that your savings lose purchasing power due to the steady increase in the cost of goods and services over time. Inflation is is a major threat for investors with a long time horizon.
These investors may want a large portion of their investment portfolios invested in securities that historically have outpaced inflation by a decent margin. Generally these investments are in common stock or common stock mutual funds.