The document discusses various types of investments and investment alternatives. It describes financial investments like mutual funds and shares that are non-physical assets, as well as non-financial investments like real estate and gold that are physical assets. It also discusses various deposit schemes offered by banks and the government like recurring deposits, fixed deposits, and savings accounts. Various money market instruments with maturity of less than one year like treasury bills, commercial paper, and certificates of deposits are also explained. Finally, the document discusses various types of bonds like corporate bonds and convertible bonds. It provides details on their features, evaluation, and objectives of issuance.

1. Dr. NGPASC
COIMBATORE | INDIA
Dr. NGPASC
COIMBATORE | INDIA

2. Dr. NGPASC
COIMBATORE | INDIA
Dr. NGPASC
COIMBATORE | INDIA

3. Investment involves making of a
sacrifice in the present with the hope
of deriving future benefits.
It is considered the sacrifice of certain
present value of money in anticipation
of a reward.
Dr. NGPASC
COIMBATORE | INDIA
Investment

4. These are the tools used to reduce risk
through diversification.
Dr. NGPASC
COIMBATORE | INDIA
Investment Alternatives

5. – Investment in Equity Shares, Preference
shares, Bonds, Government Securities
– Mutual Funds
– Real Estate
– Gold
– Silver
– Provident fund
– Unit Trust
– National Savings Scheme
– LIC
Dr. NGPASC
COIMBATORE | INDIA
Investment Alternatives

6.  Financial Investments
 Non-financial Investments
Dr. NGPASC
COIMBATORE | INDIA

7. These are the financial instruments that are used
in investment with the anticipation of getting
growth or return in the form of large sum of
money.
These are the non-physical assets, that cannot
be seen or touched, but are present in electronic
form.
 Example:- Mutual funds, shares, bonds,
debentures, equities, etc.
Dr. NGPASC
COIMBATORE | INDIA
Financial Investments

8.  These are the assets that are used as an
investment alternative.
 The prices of non-financial investments
can increase as well as decrease with
time.
 These are the assets which are physically
present and can be seen or touched.
 Example:- Real estate, gold/silver, etc.
Dr. NGPASC
COIMBATORE | INDIA
Non-Financial Investments

9. Dr. NGPASC
COIMBATORE | INDIA
Deposits

10. Dr. NGPASC
COIMBATORE | INDIA
DEPOSIT
 A sum of money placed or kept in a bank
account, usually to gain interest. The term
Deposit refers to an amount of money in cash or
check form or sent via a wire transfer that is
placed into a bank account. The target bank
account for the Bank Deposit can be any kind
of account that accepts deposits.

11. Dr. NGPASC
COIMBATORE | INDIA
TYPES OF DEPOSITS
 Demand Deposit
a) Saving deposits
b) Current deposits
 FIXED/TERM/TIME DEPOSITS
a) Recurring Deposit
b) Cumulative deposit
c) Non-Cumulative Deposit

12. Dr. NGPASC
COIMBATORE | INDIA
List of Post Office and Government
Schemes in India
 Post office time deposits
The post office time deposits scheme fall under
the category of fixed deposits and are
available at all the post offices throughout India.
The investors are not entitled to receive
any amount towards interests on a monthly basis
but receive a lump sum amount as interest
when the scheme matures.

13. Dr. NGPASC
COIMBATORE | INDIA
Post office monthly income scheme
 The monthly income scheme also falls under
the category of fixed deposits and the tenure of
this scheme is 6 years. The post office has
made it a rule to accept only a single deposit in
an account and the monthly income schemes
are available in all the post offices in India.

14. Dr. NGPASC
COIMBATORE | INDIA
Kisan Vikas Patra
 Kisan Vikas Patra certificates are
secured by the backing of the
central government of India which
makes it the most effective post
office saving.

15. Dr. NGPASC
COIMBATORE | INDIA
Public provident funds (PPF)
 The public provident funds (PPF) can be
started with a sum of 500 and can extend to
1,50,000 and the account can be shifted from
a post office to another post office or from a
post office to a bank or from one bank to
another.

16. Dr. NGPASC
COIMBATORE | INDIA
Post office recurring deposit
 The tenure of the post office recurring deposit
accounts is 5 years which comprise of 60
equal monthly deposits of at least Rs.10
towards each installment.

17. Dr. NGPASC
COIMBATORE | INDIA
Senior Citizen Savings Scheme (SCSS) Account
 These accounts may be opened by an
individual, who has attained 60 years of age or
above on the date of opening of the account.

18. Dr. NGPASC
COIMBATORE | INDIA
National Savings Certificate
 This scheme is specially designed for
government employees, businessmen and
other salaried classes who are Income Tax
assesses.

19. Dr. NGPASC
COIMBATORE | INDIA
Investment Interest Lock-in Period Risk Profile
NSC 6.8% 5 years Low-risk
ELSS funds 12% to 15% 3 years Market-related risks
PPF 7.1% 15 years Low-risk
NPS 8% to 10% Till retirement Market-related risks
FD 5% to 7% 5 years Low-risk
Comparison

20. Dr. NGPASC
COIMBATORE | INDIA
Pradhan Mantri Jan Dhan Yojana
 Under this scheme financial services like
bank’s savings and deposit accounts,
remittance, credit, insurance, pension, and
more, is provided to those who are from rural
area and do not have access or does not have
any bank account.

21. Dr. NGPASC
COIMBATORE | INDIA

22. Dr. NGPASC
COIMBATORE | INDIA
Money Market Instruments
 DEBTS INSTRUMENTS, WHICH HAVE A MATURITY OF
LESS THAN ONE YEAR AT THE SAME TIME OF ISSUE
ARE CALLED MONEY MARKET INSTRUMENTS.
 THESE INSTRUMENTS ARE HIGHLY LIQUID AND
HAVE
NEGLIGIBLE RISK.
THE MONEY MARKET IS DOMINATED BY THE
GOVERNMENT, FINANCIAL INSTITUTIONS,
BANKS,
AND CORPORATES.

23. Dr. NGPASC
COIMBATORE | INDIA
MONEY
MARKET
TREASURY
BILL
CERTIFICATES
OF
DEPOSITS
CBLOREPOS
COMMERCIAL
PAPER
Money Market Instruments

24. Dr. NGPASC
COIMBATORE | INDIA
 ISSUED BY GOI
 THEY ARE OF TWO DURATIONS – 91 DAYS AND 364 DAYS
 ARE NEGOTIABLE INSTRUMENTS AND CAN BE REDISCOUNTED WITH GOI
 THEY ARE SOLD ON AN AUCTION BASIS EVERY WEEK IN CERTAIN MINIMUM
DENOMINATIONS BY THE RBI
 THEY DO NOT CARRY AN EXPLICIT INTEREST RATE. INSTEAD THEY ARE
ISSUED AT A DISTOUNT TO BE REDEEMED AT PAR. THE IMPLICT RETURN IS A
FUNCTION OF THE SIZE OF DISCOUNT AND THE PERIOD OF MATURITY.
 THEY HAVE ZERO DEFAULT RISK, ASSURED RETURN, ARE EASILY AVAILABLE
TREASURY BILLS

25. Dr. NGPASC
COIMBATORE | INDIA
NEGOTIABLE INSTRUMENTS ISSUED BY BANKS / FINANCIAL
INSTUTIONS WITH A MATURITY RANGING FROM 3 MONTHS TO
1 YEAR
 THESE ARE BANKS DEPOSITS TRANSFERABLE FROM ONE
PARTY TO ANOTHER
 THE PRINCIPAL INVESTORS ARE BANKS, FINANCIAL
INSTITUTIONS, CORPORATES AND MUTUAL FUNDS
 THESE CARRY AN EXPLICIT RATE OF INTEREST
BANKS NORMALLY TAILOR MAKE THEIR DENOMINATIONS
AND MATURITIES TO SUIT THE NEEDS OF THE INVESTORS
CERTIFICATES OF DEPOSITS

26. Dr. NGPASC
COIMBATORE | INDIA
COMMERCIAL PAPER
 ISSUED IN FORM OF PROMISSORY NOTES REDEEMABLE
AT PAR BY THE HOLDER ON MATURITY
 USUALLY HAS A MATURITY PERIOD OF 90 TO 180 DAYS
 THEY ARE SOLD AT A DISCOUNT TO BE REDEEMED AT
PAR
 CPs CAN BE ISSUED BY CORPORATES HAVING A MINIMUM
NET WORTH OF RS 5 CRORES AND AN INSVESTMASNT
GRADE FROM CREDIT RATING AGENCIES
 MINIMUM ISSUE SIZE IS RS 25 LACS

27. Dr. NGPASC
COIMBATORE | INDIA
A “REPO” INVOLVES A SIMULTANEOUS “SALE AND
REPURCHASE” AGREEMENT.
A repurchase agreement is the equivalent of a short-term,
collateralized loan. An owner of marketable securities sells
those securities to a buyer for cash. As part of the deal, the
seller agrees to buy back the securities at a later date. That
later date can be the next day, or may be the next week. The
price paid to repurchase the securities is higher than the
original selling price. The spread between the original price
and the repurchase price is equivalent to interest.
Repurchase agreements are often used by institutions with
available cash that are looking for quick, easy ways to get a
return on their money with little risk.
REPOS

28. Dr. NGPASC
COIMBATORE | INDIA
A collateralized borrowing and lending obligation (CBLO)
is a money market instrument that represents an obligation
between a borrower and a lender as to the terms and
conditions of the loan. Collateralized borrowing and lending
obligations (CBLOs) are used by those who have been
phased out of or heavily restricted in the interbank call
money market.
Collateralized Borrowing and
Lending Obligation

29. Dr. NGPASC
COIMBATORE | INDIA
Bonds

30. Dr. NGPASC
COIMBATORE | INDIA
Bonds
Corporate
Bonds
Convertible
Bonds

31. Dr. NGPASC
COIMBATORE | INDIA
Corporate
Bonds

32. Dr. NGPASC
COIMBATORE | INDIA
• Bonds are senior securities in a firm.
• They represent a promise by a company to the
bondholder to pay a specified rate of interest during a
stated time period annually and the return of the
principal sum on the date of maturity.
• Date of maturity is also called date of retirement of
bond.
Corporate Bonds

33. Dr. NGPASC
COIMBATORE | INDIA
Bonds Indenture
Three
Parties
Company
Trustee
Bondholders

34. Dr. NGPASC
COIMBATORE | INDIA
Bonds Indenture
Indenture
Interest
Authorization
Specimen
Copy
Certificate
Mortgaged
security
Remedies
Endorsement

35. Dr. NGPASC
COIMBATORE | INDIA
• Face value
• Specified time period
• Call
• Pledge of security
• Interest
• Covenants
Features of Bonds

36. Dr. NGPASC
COIMBATORE | INDIA
• Serial Bonds
• Sinking fund bonds
• Registered Bonds
• Debenture bonds
• Mortgage bonds
• Collateral bonds
• Equipment trust bonds
Types of Bonds

37. Dr. NGPASC
COIMBATORE | INDIA
• Supplemental credit bonds
• Guaranteed bonds
• Joint bonds
• Assumed bonds
• Income bonds
• Bonds with warrants
• Foreign bonds
• Convertible bonds
Types of Bonds

38. Dr. NGPASC
COIMBATORE | INDIA
Objectives of issuing bonds
Minimum
risk Objectives
Unaffected
control
pattern
Tax Saving

39. Dr. NGPASC
COIMBATORE | INDIA
Evaluation of corporate bonds
• Quality of bonds
• Credit position of issuing firm
• Repayment facility of payment of principal
• Regular payment of interest
• Risk and return on bonds

40. Dr. NGPASC
COIMBATORE | INDIA
Convertible
Bonds

41. Dr. NGPASC
COIMBATORE | INDIA
Convertible bonds
• It future promise to existing bond holders
by the issuing company to share the
growth in capital of the company.
• It is the right given to a bondholder to buy
a bond at the time of issue and later
exchange it for equity shares of the same
company.

42. Dr. NGPASC
COIMBATORE | INDIA
Convertible bonds
• Trade off between “the provision of
protection and expected future
appreciation”
• Conversion, C=P*S

43. Dr. NGPASC
COIMBATORE | INDIA
Features
Investment
Value
Conversion
Value
Market
Value
Features of Convertible bonds

44. Dr. NGPASC
COIMBATORE | INDIA
Evaluation of Convertible bonds
• Quality of Issue
• Current market price
• Estimating return and risk on
convertible bonds
• Brigham model
• Tax treatment

45. Dr. NGPASC
COIMBATORE | INDIA
Advantages of Convertible bonds
• Fixed Income
• Expansion
• Depressed Capital Market

46. Dr. NGPASC
COIMBATORE | INDIA
Disadvantages of Convertible bonds
• Price of the bond
• Risk of call
• Security

47. Dr. NGPASC
COIMBATORE | INDIA
Analysis of Convertible bonds
• Fixed investment
• Capital Appreciation
• Non tradable

48. Dr. NGPASC
COIMBATORE | INDIA
Preference Shares
• Preference Shares unlike bonds have an
investment value as it resembles both bonds
as well as equity shares.
• It is a hybrid between the bond and equity
shares.
• Like the equity shares the preference
shareholders receive dividend and have
similar features as equity shares & liabilities
at the time of liquidation of a firm.

49. Dr. NGPASC
COIMBATORE | INDIA
Features of Preference Shares
i) Dividends
ii) Right to vote
iii)Right on assets
iv)Par value
v) Retirement of debt through sinking
fund
vi)Pre-emptive right
vii)Convertibility
viii)Hybrid

50. Dr. NGPASC
COIMBATORE | INDIA
Types of Preference Shares
1) Cumulative PS
2) Non-Cumulative PS
3) Participating PS
4) Non-Participating PS
5) Redeemable PS
6) Non-Redeemable PS
7) Convertible PS
8) Non-Convertible PS

51. Dr. NGPASC
COIMBATORE | INDIA
Return on Preference Shares
1) High quality PS
2) Stability
3) Security
4) Rights of dividends
a) Participating Rights
b) Rights of Preference
Shareholders
c) Adequate coverage of
dividend
5) Investment
6) Variability of return

52. Dr. NGPASC
COIMBATORE | INDIA
Equity Shares
i) ES are also called common shares.
ii) It is more risky than the bonds and
PS.
iii)Several rights to the shareholders.
iv) They have right to vote, right of
dividend, right of being right shares,
right to bonus issues and certain tax
benefits.

53. Characteristic of features of equity shares
i) Voting
rights
ii)Ownership
rights
iii)Par value
iv)Rights
shares
Dr. NGPASC
COIMBATORE | INDIA

54. Dr. NGPASC
COIMBATORE | INDIA
Equity shares as an Investment
i) Easily transferable
ii) Liability
iii)Profit potentiality
iv)Purchasing power risk

55. Dr. NGPASC
COIMBATORE | INDIA
Government
Securities

56. Dr. NGPASC
COIMBATORE | INDIA
Types of Government Securities
i) Promissory Notes
ii) Stock Certificates

57. Characteristic of GS
 Issuing
Authority
 GS & Stock
market
 GS &
Commercial
Banks
 Issue price
Dr. NGPASC
COIMBATORE | INDIA

58. Characteristic of GS
 GS & rate of
interest
 Tax
exemption
 GS & FI
 GS &
Underwriting
Dr. NGPASC
COIMBATORE | INDIA

59. IA
Dr. NGPASC
COIMBATORE | INDIA
https://youtu.be/jOBGGep4DSw
https://youtu.be/6g9WX8hmzGo
https://youtu.be/JYsiAtkMk8c
https://youtu.be/Df2CHia0cDs
https://youtu.be/d3NWBvKQEdE

60. Dr. NGPASC
COIMBATORE | INDIA
Life Insurance

61. Dr. NGPASC
COIMBATORE | INDIA
Life Insurance
• It is a contract between a person and an
insurance company for a number of
years covering either life time period or
a fixed number of years.
• It provides protection against risk of
early death, it can be used as a collateral
for taking loans from banks.

62. Dr. NGPASC
COIMBATORE | INDIA
Features
Element of
Protection
Element of
Investment
Features of Life Insurance

63. Dr. NGPASC
COIMBATORE | INDIA
Procedure of taking a life policy
Proposal
Form
Medical
Examinations
Agents
report
Medical
Report
Acceptance
of proposal
Proof of age

64. Dr. NGPASC
COIMBATORE | INDIA
Kinds of Life Policies
Whole life policy
Ordinary Whole life policy
Limited payment Whole life policy
Single payment whole life policy
Special whole life policy
Convertible whole life policy

65. Dr. NGPASC
COIMBATORE | INDIA
Kinds of Life Policies
Endowment policy
Ordinary endowment policy
Pure endowment policy
Optional Endowment Policy
Double Endowment Policy

66. Dr. NGPASC
COIMBATORE | INDIA
Kinds of Life Policies
Anticipated Endowment Policy
Endowment combined with whole life Policy
Fixed term marriage Endowment Policy
Education Endowment Policy
Joint life Endowment Policy

67. Dr. NGPASC
COIMBATORE | INDIA
Kinds of Life Policies
Term Insurance policy
Straight term policy
Convertible policy
Decreasing term policy
Renewable policy
Yearly renewable policy

68. Dr. NGPASC
COIMBATORE | INDIA 68
Dr. NGPASC
COIMBATORE | INDIA