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Investment Tutorials
 
 
Types of Investments:
How they Work:
 
Bond
Form of a loan.  When an individual buys a bond, he/she is lending money to a bond issuer in return for a set interest, for a particular length of time.
How do bonds work:
 
When a bond is issued, it is issued with a Coupon Rate: 
interest rate stated on a bond when it is first issued. 
The coupon rate is usually paid to the bond holder semi-annually.
 
Yield:
The effective rate of interest paid on a bond. It is calculated by dividing the coupon rate by the bond market price.
 
Maturity: the end of a bond's duration: how long in years it takes for the price of a bond to be repaid.
 
Bond prices are determined by how interested investors are in it.

Stock (also known as a share or equity):
A security that represents ownership in a corporation.
Stock holders share a portion of the profits as well as the losses a company makes.
 
How do stocks work:
 
Stock market:
where stock transactions between buyers and sellers take place in an efficiently facilitated manner.
 
Trading floors:
physical locations where buying and selling of stocks take place.
 
Stock Brokers:
professionals who buy and sell securities for customers.
 
Prices of stocks are determined using an auction method. The current price of    a stock is the highest amount  a buyer is willing to buy and the lowest at which a seller is willing to sell.
 
Stock exchange can take place in one of two ways:
  • Face-to-Face: on a trade floor as exemplified by the New York Stock Exchange.
  • Over the Counter (OTC): a virtual trade arena where there is no trade floor, and where trade is done through computerized telecommunication networks.This is exemplified by the National Association of Securities Dealers Automated Quotations (NASDAQ).
Shares can be liquidated at anytime.\
 
Mutual Funds:
Open-ended funds that are not listed for trading on a stock exchange and are issued by companies which use their capital to invert in other companies.
 
How mutual funds work:
  • Company income is earned from dividends on stocks and interest on bonds. This provides for diversification: the mixing up of a wide variety of investments within a portfolio to minimize the risk involved in investment by diversifying the types of investments made.
  • A mutual fund's net asset value (NAV) is its assets-liabilities.  NAV per Share: value of one share in the mutual fund.
  • To buy an investment in a mutual fund on must pay its current NAV per share.
  • Upon purchase, an investor must pay an additional front-end load: a fee for purchasing and investment.
  • Upon sale, and investor must pay a back-end load: a fee charged to the investor for selling an investment.
  • Shares can be liquidated at any time.
Kuwait Stock Exchange
  • Share trading in Kuwait first took place in 1952 when the first shareholding company, The National Bank of Kuwait was first established.
  • In 1977 the bourse (KSE) was opened.
  • In August of 1983 the bourse became an independent financial institution.  An exchange committee along with an executive administration became responsible for managing the Kuwait Stock Exchange.
  • On January 17, 1996 KSE became the first stock market with an Arabic Automated System
  • On September 10, 2000 a law was issued by the government making it permissible for foreigners to invest in the Kuwait Stock Exchange.
 
 
 
 
 
 
 
 
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