3. Investing Short-Term Funds

e. calculate and interpret comparable yields on various securities, compare portfolio returns against a standard benchmark, and evaluate a company’s short-term investment policy guidelines;

What is the nominal rate? Nominal rate: a rate of interest based on a security’s face value. For a non-zero-bond, the coupon rate is the nominal rate.

What are the two major types of short-term investment strategies? 1. Passive strategy - simple rules for investing, safety and liquidity first 2. Active strategy - daily involvement and a wider choice of investments