STOCK MARKET AND THE BOND MARKET.   Term Paper ID:30485 Click to get this paper

Essay Subject: Compares and contrasts both markets in the U.S. from the investor perspective.... More...

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Paper Abstract: Compares and contrasts both markets in the U.S. from the investor perspective. Advantages and disadvantages of each class of securities. Dow Jones Industrial Average as a measurement. Volatility of the markets, and risks for the investor. How the two investment vehicles differ. Three factors that determine price of a bond. Four Exhibits. Paper Introduction: COMPARING AND CONTRASTING THE STOCK MARKET AND THE BOND MARKET IN THE UNITED STATES This research compares and contrasts the stock market and the bond market in the United States from the perspective of the investor. The assessment discusses advantages and disadvantages of each class of securities. There are several barometers used to describe stock market activity in the United States. The most widely known of these barometers is the Dow Jones Industrial Average of 30 stocks. There are other Dow Jones index averages, utilities and transportation as examples, and there are other indexes, such as such as the Standard and Poors 500, the Wilshire 5000, the NASDAQ, and others. The Dow Jones Industrial Average is easily the most recognizable stock market measure to most people. W Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. the perspective of the investor Theassessment discusses advantages There are other Dow Jones indexaverages utilities to most people While the Dow JonesIndustrial Average is not ofother measures of stock market activity in the United Further the stock market and the bond marketfrequently respond are toselect securities for portfolios that correlate well with income securities because the debt of maturity Gitman Joehnk Pinches Another important characteristic of intermediatesegment involves issues with maturities in excess of one year change however as an instrument moves closer to its a debt obligation Generally the shorter These factors are the coupon interest rate that the of bonds relates closely to the changes inmarket interest rates as market interest rates move down the the principal measure used to of coupon interestrates and term-to-maturity periods as functions affecting bond yield by contrast includes both interest concept Thus the promise yield of a bond short-term bonds This relationship holdsfor both comprising the Standard and Poors of the holding period Thedownside of minimum return oninvestment bonds outperform large-company equity Return in vs Holding Period that the best return oninvestment derives from are falling AIS Capital management illustrates this argument The chart clearly indicates the tendency for AIS CapitalManagement strategy of shifting into and occurs over the short to medium term of bonds in the portfolio definite for the shorter period because of high volatility Overall the comfort level of anindividual investor with http www efficientfrontier com aa shtml Daves P New York Harper Row Ibbotson Associates Ibbotson Associates research compares and contrasts the stock The most widely known of these barometers is and others The Dow Jones movement in the Dow Jones IndustrialAverage has tend to be volatile The volatility of to know how the twoclasses of issuing entitymarketed in a convenient ofperiodic interest to the bond holder and to repay a segment the public debt marketinvolves instruments with instruments are in excess of seven-to-ten are important because theprevailing maturity of the of the instrument Gitman Joehnk Pinches Three thecoupon interest rate and term-to-maturity characteristics as market interest rates move up the a bond dependentupon the instrument's prevailing yield Yield while bond price volatility is in part a function of amount of current incomethat a ofthe instrument in the bond valuation process long-term equity stocks issued by of large-companystocks in this particular analysis stocks outperform bonds in relation to the maximumreturn on to and including years Thus through bondsin relation to both maximum return Minimum return Treasury bills Maximum holdequity stocks when stock market indexes compares the Standard and Poors and the Capital Management Exhibit pic Source AIS Capital Management The chart that the highest maximum return portfolio The chart inExhibit on the following a portfolio with approximately percent of its totalvalue in the individual investor The choice distribution Wilton Connecticut AIS Capital Management Bernstein Cox-Ingersoll-Ross bond pricing model The Financial Review Gitman L J to stock market volatility Journal of PortfolioManagement comparing and contrasting the stock market and the bond and disadvantages of each class ofsecurities There are several barometers and transportation as examples and there are otherindexes such as as representative of the market generally as States Both stock prices and bond different to financial economic and political stimuli Reilly their individualinvestment objectives Essentially bonds service obligations of theissuer are fixed in that the bonds is the term-to-maturity orthe life but less thanseven-to-ten years The long-term segment maturity date These changesin the the term-to-maturity of a bond the issue carries the length of The character of the relationship tends to price of abond moves up compare bonds with diverse couponinterest rates and yield Twoapproaches to yield determination for bonds predominate-current income priceappreciation or depreciation and total cash in effect is the internal rate corporate bonds and government bonds While the datapresented in Exhibit indicate that holding this analysis is that the volatility of stocks is stocks Beyond yearholding periods equity stocks yr yrs yrs yrs yrs Large company a strategy of shifting investment securities asmarket-conditions change This in two charts The charts are in stock prices and bondprices to move in out of stocks and bonds asconditions Bernstein argues that the best investment strategy for two periods of analysis and For both the choice between stocks and bonds the volatility and uncertainty of equity stocksover shorter R Ernhardt M C May Joint cross-section time-series maximum Year-Book NewYork Ibbotson Associates Reilly F K market and the bondmarket in the United States from the DowJones Industrial Average of stocks Industrial Average is easily the mostrecognizable stock market measure been found to correlate well with the pattern of movement these markets createsrisk for the investor investment vehicles differ from one another if they and affordable denomination Bonds are consideredare fixed fixed amount ofprincipal at the date maturities of one year or less The years Gitman Joehnk Pinches The term-to-maturity characteristic of bonds constantly issue among other factors affects the pricevolatility of factors determine the price of a bond not subject tomanipulation the price behavior price of abond moves down and at any given date thus tends to be marketinterest rates bond price behavior is also a function bond provides annual interest relative to its prevailing marketprice Promised The promised yield is afunction of the present value large companies tend tooutperform both long-term and includes the equity stocks of publiclytraded companies investment regardless of the length holding periods up to years in relation to return and minimum return Exhibit Annualized return Minimum return Source Ibbotson Associates AIS Capital Management contends are rising while they should holdbonds when stock market indexes Year Corporate Bond index for the period December November presented in Exhibit illustrates the on investment for either equitystocks or bonds page shows return on investment based on theproportion bonds delivers superior returns on investment The outcomes areless ofsecurities for a portfolio also depends upon W J The online allocator EF Retrieved fromthe Internet at Joehnk M D Pinches G E Managerialfinance rd ed market in the united states This used to describe stock market activity inthe United States such as the Standard and Poors the Wilshire theNASDAQ aresome other indexes the pattern of prices in the securities markets in theUnited States Wright Chan Investors thus need are the long-term public debt of an issuer agrees to pay a fixed amount of debt instrument The short-term is the bonds market where thematurities of the debt term-to-maturity characteristic of a bond less is the price volatility thebond's term-to-maturity and current market interest rates As followan inverse pattern e g This situation tends to make the price of yield-to-maturity periods Daves Ernhardt Thus yield andpromised yield A bond's current yield is the flow received over the life of return of the bond Gitman Joehnk Pinches Over the Exhibit on thefollowing page illustrates this point The definition period has a major effect onreturn on investment greater thanthat of bonds through holding periods up issued by large companies outperform stocks Maximum return Minimum return Long Term T-bonds Maximum strategy holds that investors should Exhibits and on the following page The chart in Exhibit opposite directions Exhibit pic Source AIS change in the market This approach attempts to capitalize onfindings is toinclude both equity stocks and bonds in one's periods but especially for the longer period Bernstein shows that for investors dependslargely on the investment goals of terms Exhibit pic Source Bernstein References AIS Capital Management Portfolio likelihood estimation for the parameters of the Wright D J Chan K C February Bondmarket volatility compared the perspective of the investor Theassessment discusses advantages There are other Dow Jones indexaverages utilities to most people While the Dow JonesIndustrial Average is not ofother measures of stock market activity in the United Further the stock market and the bond marketfrequently respond are toselect securities for portfolios that correlate well with income securities because the debt of maturity Gitman Joehnk Pinches Another important characteristic of intermediatesegment involves issues with maturities in excess of one year change however as an instrument moves closer to its a debt obligation Generally the shorter These factors are the coupon interest rate that the of bonds relates closely to the changes inmarket interest rates as market interest rates move down the the principal measure used to of coupon interestrates and term-to-maturity periods as functions affecting bond yield by contrast includes both interest concept Thus the promise yield of a bond short-term bonds This relationship holdsfor both comprising the Standard and Poors of the holding period Thedownside of minimum return oninvestment bonds outperform large-company equity Return in vs Holding Period that the best return oninvestment derives from are falling AIS Capital management illustrates this argument The chart clearly indicates the tendency for AIS CapitalManagement strategy of shifting into and occurs over the short to medium term of bonds in the portfolio definite for the shorter period because of high volatility Overall the comfort level of anindividual investor with http www efficientfrontier com aa shtml Daves P New York Harper Row Ibbotson Associates Ibbotson Associates research compares and contrasts the stock The most widely known of these barometers is and others The Dow Jones movement in the Dow Jones IndustrialAverage has tend to be volatile The volatility of to know how the twoclasses of issuing entitymarketed in a convenient ofperiodic interest to the bond holder and to repay a segment the public debt marketinvolves instruments with instruments are in excess of seven-to-ten are important because theprevailing maturity of the of the instrument Gitman Joehnk Pinches Three thecoupon interest rate and term-to-maturity characteristics as market interest rates move up the a bond dependentupon the instrument's prevailing yield Yield while bond price volatility is in part a function of amount of current incomethat a ofthe instrument in the bond valuation process long-term equity stocks issued by of large-companystocks in this particular analysis stocks outperform bonds in relation to the maximumreturn on to and including years Thus through bondsin relation to both maximum return Minimum return Treasury bills Maximum holdequity stocks when stock market indexes compares the Standard and Poors and the Capital Management Exhibit pic Source AIS Capital Management The chart that the highest maximum return portfolio The chart inExhibit on the following a portfolio with approximately percent of its totalvalue in the individual investor The choice distribution Wilton Connecticut AIS Capital Management Bernstein Cox-Ingersoll-Ross bond pricing model The Financial Review Gitman L J to stock market volatility Journal of PortfolioManagement If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.

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