MBA 3rd semester FM01 Notes

1. INVESTMENT Vs SPECULATION
INVESTOR SPECULATOR
Planning Horizon Long Short
Risk Disposition Moderate High
Return
Expectation
Moderate High
Basis for Decisions Fundamental Factors and careful
evaluation of firm
Technical Charts , Market
Psychology
Leverage Investors use own funds Resorts to borrowing

2. Types of investors
• Regular Investors-long term equity
• Only savers-FD,RD,PPF
• Seasonal Traders-Close to investment
professionals
• Risk Taker-Never Panic , Work against herd
mentality

3. Approaches of Security Analysis
• Fundamental Approach
• Technical Approach
• Psychological Approach

4. Common Errors in Investment
Management
• Inadequate comprehension of return and risk
• Vaguely formulated Investment Policy
• Untimely Entries and Exit
• High Cost
• Over Diversification and Under-Diversification
• Wrong attitude toward losses and profits