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...Securities come in a bewildering variety of forms - there are more types of securities than there are breeds of cats and dogs, for instance. They range from relatively straightforward to incredibly complex. A straight bond promises to repay a loan over a fixed amount of interest over time and the principal at maturity. A share of stock, on the other hand, represents a fraction of ownership in a corporation, and a claim to future dividends. Today, much of the innovation in finance is in the development of sophisticated securities: structured notes, reverse floaters, IO's and PO's -- these are today's specialized breeds. Sources of information about securities are numerous on the world-wide web. For a start, begin with theOhio State Financial Data Finder. All securites, from the simplest to the most complex, share some basic similarities that allow us to evalute their usefulness from the investors' perspective. all of them are economic claims against future benefits. No-one borrows money that they intend to repay immediately. The dimension of time is always present in financial instruments. Thus, a bond represents claims to a future stream of pre-specificed coupon payments, while a stock represents claims to uncertain future dividends and division of the corporate assets. In addition, all financial securities can be characterized by two important features: risk and return These two key measures will be the focus of this second module. ....

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