Investment management chapter 6 investing in stocks and bondsHeng Leangpheng
This document provides an overview of investing in stocks and bonds. It discusses common stock and the rights of stockholders, how the stock market works, different types of stocks, and how stock performance is measured. It also outlines the basics of bonds including the advantages of bonds, bond terminology, types of bonds, and factors that influence bond prices. Additionally, it briefly touches on preferred stock. The document is intended to educate readers on fundamental concepts relating to investing in equities and fixed income securities.
Investment management chapter 5 the arbitrage pricing theoryHeng Leangpheng
The document discusses factor risk models and the arbitrage pricing theory (APT). It provides examples of the single index model (SIM) and multiple index model (MIM), showing how an asset's expected return is determined by systematic factors like inflation, GDP growth, and exchange rates, as well as an asset-specific error term. The APT states that in efficient markets with no arbitrage opportunities, the expected return is linearly related to factor sensitivities or betas. Tests provide some support that risk factors beyond the market affect returns as the APT predicts.
Investment management chapter 4.2 the capital asset pricing modelHeng Leangpheng
The document summarizes the key aspects of the Capital Asset Pricing Model (CAPM). It outlines the three main assumptions of CAPM: 1) investors can trade securities without costs, 2) investors only hold efficient portfolios, 3) investors have homogeneous expectations. It then explains how given these assumptions, the market portfolio of all risky securities becomes the efficient portfolio. It defines beta and shows how an asset's expected return is determined based on the market risk premium and its beta. Examples are provided to illustrate how to calculate betas and expected returns for individual stocks and portfolios using CAPM.
- The document discusses efficient portfolios and the efficient frontier in the context of investing in different combinations of stocks.
- It explains that a portfolio with a higher expected return and lower volatility is more efficient. Investing solely in one stock, like Coca-Cola, is inefficient compared to a diversified portfolio.
- The correlation between stocks affects the volatility of a portfolio - lower correlation results in lower volatility. Short selling, more stocks, and including risk-free assets like Treasury bills can also affect the efficient frontier.
- The tangent portfolio, which generates the steepest line when combined with the risk-free rate, provides the best risk-return tradeoff. The efficient portfolio is a combination of the tangent
This document outlines learning objectives and content for a chapter on optimal portfolio choice and investment management. It discusses key concepts such as computing the expected return and volatility of portfolios with different weights and numbers of assets. Specific topics covered include calculating portfolio weights, covariance and correlation, the efficient frontier, and how diversification reduces risk through combining assets with imperfect correlations. Formulas are provided for determining portfolio expected return, variance, and standard deviation. Examples demonstrate applying these concepts to sample portfolios.
Investment management chapter 3 the basic of investment decisionsHeng Leangpheng
This document discusses investment management and the investment decision process. It covers why people invest, the risks and returns of different asset classes, and the steps involved in making investment decisions. The key points are:
1) People invest to increase future consumption and earn returns on their savings. Different assets have different risk-return tradeoffs, with more risk generally requiring more potential return.
2) Making investment decisions involves analyzing individual securities, building a portfolio, and managing it over time either passively or actively.
3) Common errors include misunderstanding risk and return, not having a clear investment policy, and making emotional or irrational decisions rather than thoughtful assessments.
Investment management chapter 2 buying and selling securitiesHeng Leangpheng
This document discusses how to buy and sell securities such as stocks, bonds, and mutual funds. It covers selecting a brokerage firm, placing orders, and reading stock price quotations. It also discusses primary and secondary markets, organized exchanges like the NYSE and NASDAQ, and over-the-counter markets. The document provides tips on using investment information resources to research companies and funds before investing. It also discusses calculating required rates of return and comparing them to potential rates of return to evaluate investment opportunities.
Investment management chapter 1 introduction to investmentHeng Leangpheng
This document provides an introduction to investment terminology and concepts. It defines key terms like finance, investment, and different types of financial assets. It also summarizes the major participants in the financial system including households, financial intermediaries like banks and mutual funds, and the markets they interact in such as primary and secondary markets. Different types of financial securities are also outlined including debt instruments and equity instruments.
Investment management chapter 6 investing in stocks and bondsHeng Leangpheng
This document provides an overview of investing in stocks and bonds. It discusses common stock and the rights of stockholders, how the stock market works, different types of stocks, and how stock performance is measured. It also outlines the basics of bonds including the advantages of bonds, bond terminology, types of bonds, and factors that influence bond prices. Additionally, it briefly touches on preferred stock. The document is intended to educate readers on fundamental concepts relating to investing in equities and fixed income securities.
Investment management chapter 5 the arbitrage pricing theoryHeng Leangpheng
The document discusses factor risk models and the arbitrage pricing theory (APT). It provides examples of the single index model (SIM) and multiple index model (MIM), showing how an asset's expected return is determined by systematic factors like inflation, GDP growth, and exchange rates, as well as an asset-specific error term. The APT states that in efficient markets with no arbitrage opportunities, the expected return is linearly related to factor sensitivities or betas. Tests provide some support that risk factors beyond the market affect returns as the APT predicts.
Investment management chapter 4.2 the capital asset pricing modelHeng Leangpheng
The document summarizes the key aspects of the Capital Asset Pricing Model (CAPM). It outlines the three main assumptions of CAPM: 1) investors can trade securities without costs, 2) investors only hold efficient portfolios, 3) investors have homogeneous expectations. It then explains how given these assumptions, the market portfolio of all risky securities becomes the efficient portfolio. It defines beta and shows how an asset's expected return is determined based on the market risk premium and its beta. Examples are provided to illustrate how to calculate betas and expected returns for individual stocks and portfolios using CAPM.
- The document discusses efficient portfolios and the efficient frontier in the context of investing in different combinations of stocks.
- It explains that a portfolio with a higher expected return and lower volatility is more efficient. Investing solely in one stock, like Coca-Cola, is inefficient compared to a diversified portfolio.
- The correlation between stocks affects the volatility of a portfolio - lower correlation results in lower volatility. Short selling, more stocks, and including risk-free assets like Treasury bills can also affect the efficient frontier.
- The tangent portfolio, which generates the steepest line when combined with the risk-free rate, provides the best risk-return tradeoff. The efficient portfolio is a combination of the tangent
This document outlines learning objectives and content for a chapter on optimal portfolio choice and investment management. It discusses key concepts such as computing the expected return and volatility of portfolios with different weights and numbers of assets. Specific topics covered include calculating portfolio weights, covariance and correlation, the efficient frontier, and how diversification reduces risk through combining assets with imperfect correlations. Formulas are provided for determining portfolio expected return, variance, and standard deviation. Examples demonstrate applying these concepts to sample portfolios.
Investment management chapter 3 the basic of investment decisionsHeng Leangpheng
This document discusses investment management and the investment decision process. It covers why people invest, the risks and returns of different asset classes, and the steps involved in making investment decisions. The key points are:
1) People invest to increase future consumption and earn returns on their savings. Different assets have different risk-return tradeoffs, with more risk generally requiring more potential return.
2) Making investment decisions involves analyzing individual securities, building a portfolio, and managing it over time either passively or actively.
3) Common errors include misunderstanding risk and return, not having a clear investment policy, and making emotional or irrational decisions rather than thoughtful assessments.
Investment management chapter 2 buying and selling securitiesHeng Leangpheng
This document discusses how to buy and sell securities such as stocks, bonds, and mutual funds. It covers selecting a brokerage firm, placing orders, and reading stock price quotations. It also discusses primary and secondary markets, organized exchanges like the NYSE and NASDAQ, and over-the-counter markets. The document provides tips on using investment information resources to research companies and funds before investing. It also discusses calculating required rates of return and comparing them to potential rates of return to evaluate investment opportunities.
Investment management chapter 1 introduction to investmentHeng Leangpheng
This document provides an introduction to investment terminology and concepts. It defines key terms like finance, investment, and different types of financial assets. It also summarizes the major participants in the financial system including households, financial intermediaries like banks and mutual funds, and the markets they interact in such as primary and secondary markets. Different types of financial securities are also outlined including debt instruments and equity instruments.
4. 1. General features
Turnover tax is paid in the rate of 2% of the monthly turnover every month and
implemented on tax payers, official-assessment system. (Someone in little taxes
shall not be a tax payer in the self-assessment system).
4