General Meeting - 4/9/08

OIG – General Meeting – 4/9/2008

Upcoming Events:
Math Alumnae Career Panel – Friday, April 11th at 4:30 PM in Park 243

Personal Finance – Thursday, April 10th at 6:30 PM in HC Gest 101

Wall Street Journal/Investopedia

Private equity: Equity capital that is made available to companies or investors, but not quoted on a stock market. The funds raised through private equity can be used to develop new products and technologies, to expand working capital, to make acquisitions, or to strengthen a company's balance sheet.

Leveraged buyouts (LBOs): the acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition. Often, the assets of the company being acquired are used as collateral for the loans in addition to the assets of the acquiring company. The purpose of leveraged buyouts is to allow companies to make large acquisitions without having to commit a lot of capital.

Write-down: Reducing the book value of an asset because it is overvalued compared to the market value.

Credit crunch: An economic condition where investment capital is difficult to obtain. Banks and investors become wary of lending funds to corporations, thereby driving up the price of debt products for borrowers.

Fannie Mae (Federal National Mortgage Association [FNMA]): A government-sponsored enterprise (GSE) that was created in 1938 to expand the flow of mortgage money by creating a secondary mortgage market. Fannie Mae is a publicly traded company which operates under a congressional charter that directs Fannie Mae to channel its efforts into increasing the availability and affordability of homeownership for low-, moderate-, and middle-income Americans.

Freddie Mac (Federal Home Loan Mortgage Corp) (FHLMC) : A stockholder-owned, government-sponsored enterprise (GSE) chartered by Congress in 1970 to keep money flowing to mortgage lenders in support of homeownership and rental housing for middle income Americans. The FHLMC purchases, guarantees and securitizes mortgages to form mortgage-backed securities. The mortgage-backed securities that it issues tend to be very liquid and carry a credit rating close to that of U.S. Treasuries.

Bubble: 1. An economic cycle characterized by rapid expansion followed by a contraction.2. A surge in equity prices, often more than warranted by the fundamentals and usually in a particular sector, followed by a drastic drop in prices as a massive selloff occurs.3. A theory that security prices rise above their true value and will continue to do so until prices go into freefall and the bubble bursts.

Dutch Tulip Bulb Market Bubble: One of the most famous market bubbles of all time, which occurred in Holland during the early 1600s when speculation drove the value of tulip bulbs to extremes. At the height of the market, the rarest tulip bulbs traded for as much as six times the average person's annual salary.

Municipal Bond: A debt security issued by a state, municipality or county to finance its capital expenditures. Municipal bonds are exempt from federal taxes and from most state and local taxes, especially if you live in the state in which the bond is issued. Also known as a "muni".

Eat well, sleep well: An adage that, referring to the risk/return trade-off, says that the type of security an investor chooses depends on whether he or she wants to eat well or sleep well.