This document provides an introduction to Islamic investment. It defines key terms like investing, finance, and investors. It also classifies investments as real or financial, marketable or non-marketable, and transferable or non-transferable. The nature of investment management is discussed, including balancing risk and return. The investment management process is outlined in five steps - setting an investment policy, analyzing securities, valuing assets, constructing a portfolio, and evaluating performance. Finally, the objectives of investment are explained as earning income, achieving capital appreciation, ensuring safety and liquidity of funds.
THE INVESTMENT ENVIRONMENT - PART 1: Meaning of Investment/Types of Investments/Characteristics of Investment/Objectives of Investment/Types of Investors/Investment Management Process
THE INVESTMENT ENVIRONMENT - PART 1: Meaning of Investment/Types of Investments/Characteristics of Investment/Objectives of Investment/Types of Investors/Investment Management Process
investment decisions, risk and uncertainity, types of risk, techniques of measuring risk, cost of capital, importance, factors affecting cost of capital, computation of cost of capital, capital structure, capital structure theories, dividend theories, walter model, gordon model, mm model, working capital management, types of working capital, factors influencing working capital, preparation of cash budget, problems on working capital, corporate valuation,methods
Watch full video on Youtube - https://youtu.be/Qmw15cG2Mv4
This video enhances your knowledge on portfolio management. It explains the meaning, types, process and objective of managing portfolio which comprises of stocks, mutual funds, commodities, metal, real estate etc. diversified sort of investments.(portfolio management)
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Managerial Finance. "Risk and Return". Types of risk. Required return. Correlation. Diversification. Beta coefficient. Risk of a portfolio. Capital Asset Pricing Model. Security Market Line.
investment decisions, risk and uncertainity, types of risk, techniques of measuring risk, cost of capital, importance, factors affecting cost of capital, computation of cost of capital, capital structure, capital structure theories, dividend theories, walter model, gordon model, mm model, working capital management, types of working capital, factors influencing working capital, preparation of cash budget, problems on working capital, corporate valuation,methods
Watch full video on Youtube - https://youtu.be/Qmw15cG2Mv4
This video enhances your knowledge on portfolio management. It explains the meaning, types, process and objective of managing portfolio which comprises of stocks, mutual funds, commodities, metal, real estate etc. diversified sort of investments.(portfolio management)
Thank You
Managerial Finance. "Risk and Return". Types of risk. Required return. Correlation. Diversification. Beta coefficient. Risk of a portfolio. Capital Asset Pricing Model. Security Market Line.
Portfolio revision, securities, New securities, existing securities, purchases and sales of securities, maximizing the return, minimizing the risk, Transaction cost, Taxes, Statutory stipulations, Intrinsic difficulty, commission and brokerage, push up transaction costs, reducing the gains, constraint, Taxes, capital gains, long-term capital, lower rate, Frequent sales, short-term capital gains, investment companies, constraints, established, objectives, skill, resources and time, substantial adjustments, mispriced, excess returns, heterogeneous expectations, better estimates, generate excess returns, market efficiency, little incentive, predetermined rules, changes in the securities market, Performance measurement, Performance evaluation, superior or inferior, small investors, better performance, prompt liquidity, comparative performance, purchase and sale of securities.
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June 3, 2024 Anti-Semitism Letter Sent to MIT President Kornbluth and MIT Cor...Levi Shapiro
Letter from the Congress of the United States regarding Anti-Semitism sent June 3rd to MIT President Sally Kornbluth, MIT Corp Chair, Mark Gorenberg
Dear Dr. Kornbluth and Mr. Gorenberg,
The US House of Representatives is deeply concerned by ongoing and pervasive acts of antisemitic
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Acetabularia acetabulum is a single-celled green alga that in its vegetative state is morphologically differentiated into a basal rhizoid and an axially elongated stalk, which bears whorls of branching hairs. The single diploid nucleus resides in the rhizoid.
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A Strategic Approach: GenAI in EducationPeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
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2. Topics Outline
What Is Investing
Classification of Investment
Nature of Investment Management
Scope of Investment Management
Investment Management Process
Objectives of Investment
Features of Ideal Investment Program
2
3. Terminology
Finance
•Commercial or government activity
of managing money, debt, credit
and investment
Investment
•The current commitment of resources
in order to achieve later benefits.
•Present commitment of money for the
purpose of receiving more money later –
invest amount of money then your
capital will increase
Investor
•A person or an organisation that buys shares or
pays money into a bank in order to receive a
profit
3
4. Comparison of Terms
Investment Speculation Gambling
Objective Specific
goal/objectives
Objectives, only
to gain high
return
Based on luck
Risk Low risk Moderate to high
risk
High risk
Period Long term Short term Short term
Analysis Fundamental
analysis
Technical
analysis or based
on herding
behavior
No analysis
Return Current income
(dividend,
interest)
Capital Gain Capital Gain
4
5. Investment from Various Perspectives
In
General
The
application of
money for
earning more
money.
Investment also
means savings
or savings
made through
delayed
consumption.
In
Finance
The purchase
of a financial
product or
other item of
value with an
expectation of
favorable
future returns.
In
Business
The purchase
by a producer
of a physical
good, such as
durable
equipment or
inventory, in
the hope of
improving
future
business.
In
Economics
Utilization of
resources in
order to
increase
income or
production
output in the
future.
• E.g. An amount
deposited into a
bank or
machinery that is
purchased in
anticipation of
earning income in
the long run.
5
6. What is Investing?
Purchase of
assets with
the goal of
increasing
future income
Focuses on
wealth
accumulation
Appropriate
for long-
term goals
6
7. Classification of Investment
Real Investment
and Financial
Investment
Real investment
is the purchase
of land,
machinery, etc.
Financial
investment is
the purchase of
a "paper"
contract.
Marketable and
Non marketable
investment
Investments
listed on stock
exchanges are
easily
marketable.
Non marketable
securities are
not traded in
market such as
bank drafts.
Transferable and
Non transferable
investment
Generally
marketable
securities are
transferable
and non-
marketable
securities are
non
transferable.
7
8. Real Investment vs. Financial Investment
•Used for consumption or
production of goods and services
•It can be used for further creation
of assets e.g. shares and bonds.
•Provide finance for real
investment decisions.
•Guide real investment decisions.
•Carry high market liquidity.
•Tangible in nature
•Some are useful for further
production. Capital goods like
plant and machinery.
•Some of them like ornaments
are not useful.
•The share issue of a firm
finances the purchase of
capital.
•The commitment to a
mortgage finances the
purchase of property.
Real investments
and financial
investments are
linked.
E.g.
The method used
for evaluating the
value of a
financial
investment is
known as
Valuation.
Feature of
Real Investment:
Feature of
Financial
Investments:
8
10. Nature of Investment Management
1.
It helps in making investment
decisions.
Higher the risk,
higher the
expected
return.
2.
One can take decision only
after analyzing entire process
of investment that starts with
fund contribution and ends
with getting expectations
fulfilled.
Higher the time
period of
investment,
lesser the
uncertainties of
investment.
3.
Cash has an investment
opportunity when you decide
to invest it you are deprived
of this opportunity to earn a
return on that cash.
When the
general price
level rises the
purchasing
power of cash
declines- larger
the increase in
inflation, the
greater the
depletion in the
buying power of
cash.
10
11. Nature of Investment Management
4.
Some investors buy government
securities or deposit their money in
bank accounts that are adequately
secured.
In contrast, some others
prefer to buy, hold and sell
equity shares even when they
know that they get exposed to
ris
5.
Risk is the probability that the
actual return on an investment will
be different from its expected
return.
Using this definition of risk, you
may classify various
investments into risk
categories.
Government securities would
be seen as risk free
investments because the
probability of actual return
diverging from expected return
is zero.
11
12. Scope Of Investment Management
Investors differ from each other in terms of objectives,
preferences and constraints
1. Identification of
Investors’
Requirements
• The foundation of investment management is thus, collection of data relating to investors’
requirements.
• The analysis of this data gives an idea about the assets and securities to be selected.
The policy will lay down the different asset classes of
investment viz shares, debentures, bonds etc. and the
proportion of funds to be invested in each class
2. Formulation of
Investment Policy
and Strategy
• After formulating the investment policy, the next stage is to prepare the investment strategy.
• Investment strategy will be formulated for income and capital appreciation and for a level of risk
tolerance.
• The investment strategy will have to be correlated with the expectation of the capital market and the
individual sectors of industry.
• On the basis of investment policies, strategy and investors’ expectations of the market, a particular
combination of investments is selected.
12
13. Scope Of Investment Management
Implementation and execution of investment process
3. Execution of
Strategy
•This process requires a lot of research, analysis and judgment.
•he portfolio thus, constructed may relate to the needs of a given level of income, liquidity,
safety, high yielding growth stocks etc.
•The success of the portfolio would depend upon the initiative, innovation and judgment of the
person constructing the portfolio.
The performance of the portfolio is evaluated and
adjustments are made in the portfolio composition from
time to time
4. Monitoring of
Portfolio
•Thus is called monitoring and risk structuring of the portfolios.
•This process is an adjustment of the components of the portfolio to improve the performance to
make it optimal and efficient.
•The changes in investors conditions, market conditions and in industry performance are taken
into account in the portfolio adjustments.
13
14. The Investment Management Process
Investment policy provides the raw material for the
Investment management. In this stage various investment
assets are identified and their features are connected.
1.Set Investment
policy
• The goal of investment policy is to decide which stock to be held in an investment portfolio. The
formulation of investment policy requires
• Determination of amount invested.
• Determination of investment objectives.
• Identification of potential investment assets.
• Consideration of attributes of various investment assets.
• Allocation of investible funds to various investment categories.
Its objective is to determine future risk and return in
holding various blends of individual securities.
2. Conduct
security analysis
• It helps in generating efficient portfolio.
• To determine efficient portfolio expected return level is chosen and assets are substituted until
portfolio combination with a smallest variance at that return level is found.
14
15. The Investment Management Process
Investment value is generally taken to be the present
worth to the owners of future benefits from
investments.
3. Valuation of
Securities
•An appropriate stet of weights have to be applied with the use of forecasted benefits to estimate
the value of investment assets.
•Comparison of the value with the current market price of the asset allows the determination of
the relative attractiveness of the assets.
Portfolio construction are involving several steps.
4. Portfolio
Construction
•It involves the following step :
•Deciding the diversification level.
•Considering the investment timing.
•Selection of Investment timing.
•Allocation of investible funds to investment assets.
•Acquisition of assets.
15
16. The Investment Management Process
After selection of portfolio the next step is that of evaluation from
time to time depending on market conditions.
5. Portfolio Evaluation
and Revision
• The primary motive of evaluation is to improve performance.
• Effective portfolio evaluation requires an investor to balance what he has against available alternatives.
16
17. Investment Objectives
The primary objective of investment:
To increase the rate of return and to reduce the risk.
The other objectives are:
•Main objective is to earn income in form of dividend yield or interest.
•Investment should earn reasonable and expected return on the investment.
Income
•The other important objective of investment is appreciation in the capital
invested over a period of time.
•Capital appreciation can be achieved by following:-
•Conservative Growth
•Aggressive Growth
•Speculation
Capital appreciation
17
18. Investment Objectives
• The returns expected from securities may be of two types:
• Periodical Cash Receipts
• Capital Gain
Forms Of Return
• Another important consideration in making investment is that fund so invested should
be safe and secure.
• The investment should be capable for redemption as and when due.
Safety and Security Of Funds
• Before making the investment, the investor should consider the degree of liquidity
require.
• Certain securities are capable of being sold in the readily available market and some
securities may not be so liquid.
Liquidity
• Before making the investment, investors should also take into consideration the
provisions of income tax, capital gain tax and wealth tax to minimize his tax burden and
avail all tax exemptions available to him.
Tax and Zakat considerations
18
19. Rate of Return
Return is the profit or income generated by
savings and investing.
Total return on investment expressed as a percentage of
the amount of money invested
Total
Return
Amount
of
Money
Invested
Rate of
Return
Investments usually earn higher
rates of return than savings tools
19
20. Saving and Investment
Once an appropriate
amount of liquid
assets are reached
Recommend
refocusing
goals from
saving to
investing
20
21. Risk and Investment
POTENTIAL
Risk- uncertainty regarding the outcome of a
situation or event.
Investment Risk- possibility that an investment will
fail to pay the expected return or fail to pay a
return at all
All investment tools carry some level of risk
21
RISKRETURN
22. Features of an Ideal Investment Program
1. Safety
• Every investor wants to be insured of the safety of principle amount which he is
investing.
• An ideal investment programme must be consistent with the objectives preferences
and constraints of the investor.
• To minimize risk and to ensure safety , the investor should diversify his investment
2. Liquidity
• Investor must insure a minimum liquidity in his investment to meet contingencies.
• The investor should keep a part of his total investment in the form of readily saleable
securities.
3. Regularity
and stability of
income
• Regularity of income at a stable and consistent rate is essential in investment
programme.
22
23. Features of an Ideal Investment Program
3. Stability of
purchasing
power
• Investors should balance their investment programs to fight
against any purchasing power instability.
• Any rational investor knows that money is losing its value by
the extent of rise in prices.
4. Capital
appreciation
• The ideal growth stock is the right issue in the right industry
bought at the right time.
• The investor should try and forecast which securities will
appreciate in future.
5. Tax benefits
• The investor should plan their investment in such a way that
the tax liability is minimum.
• Investor should concerned about the return on investment as
well as the burden of taxes on such investment.
23
24. Features of an Ideal Investment Program
6. Legality
• Investor should aware of the various legal provisions relating
to the purchase of investment.
• The safest way to invest in securities issued by UTI, NSC etc.
7.
Tangibility
• Most of investor prefer to keep a part of their money invested
in tangible securities such as building machinery etc.
• Tangible property does not yield income, the only satisfaction
is the pride of possession.
24