Understanding Securities Markets All the investment vehicles that you can use in your investment pian are traded in the securities markets in the form of stocks, bonds, and other financlal Instruments. There are physical places such as the NYSE (New York Stock Exchange) or the electronic networks such as NASDAQ (National Association of Securities Dealers Automated Quotations) where investors trade these securities. Securities markets can be divided into primary and secondary markets. When new securities created by the issuer are sold to the public usually with the involvement of an investment bank, the transactions take place in the market. Within the arena of security trading, the secondary market plays an extremely important role. The secondary market can be divided into the broker market and dealer market. For each of the following statements, indicate by checking the appropriate boxes, whether each statement is true of broker markets, dealer markets, both markets, or neither market. use in your investment plan are traded in the securities markets in the form of stocks, b sical places such as the NYSE (New York Stock Exchange) or the electronic networks such as omated Quotations) where investors trade these securities. to primary and secondary markets. When new securities created by the issuer are sold to the , the transactions take place in the market. the secondary market plays an extren role. The secondary market can be divide ts, indicate by checking the appropriate boxes, whether each statement is true of broker markets Rebalancing Your Portfolio Portfolio rebalancing is the process of bringing your different asset classes (stocks, bonds, and cash) back into proper relationship following a significant change in the value of one or more of them. You should monitor your investments and normally rebalance your portfolio about once a year to retum your investments to their proper balance when they no longer conform to your investment pian. Suppose that you begin an investment program with a portfollo having an asset allocation of 40% bonds, 25% equitles, and 35% cash investments. One year later, you find that some investments have performed better than others. After a year, the portfolio now consists of 40% bonds, 40% : equities, and 20% cash investments. To rebalance this portfolio back to its original asset allocation, you should sell some of your. proceeds to purchase additional. and use the cash investments tionship following a your investment equities and cash investments rrtfolio about once a year form to your inv asset allocation o equities and bonds 35% cash investments. others. After a equities 40% bonds, 40% bonds and cash investments sell some of your and use the Portfolio rebalancing is the pr significant change in the value o set classes (stocks, bonds to return your investments to th monitor your investments nger conform to your inve: Suppose that you begin an inves ing an asset allocation of One year later, you find that son equities, and 20% cash investme er than others. After a yea To rebalance this portfolio back t proceeds to purchase additional ould sell some of your
