This document provides an overview and study guide for a unit on the financial environment. It discusses six key principles of finance: 1) time value of money, which means a dollar today is worth more than a dollar in the future; 2) risk and return, which explains that higher risk investments require higher potential returns; 3) diversification, or spreading investments across different assets to reduce risk; 4) market efficiency, where market prices quickly reflect new public information; 5) conflicts between management and owners' interests due to differing priorities; and 6) reputational matters that influence stock prices. Examples are given for each principle.
Ten principles that form the foundations of financial managementNur Dalila Zamri
The document outlines 10 principles that form the foundations of financial management. The first principle discusses the relationship between risk and return, noting that investors will only take on additional risk if there is potential for higher return. The third principle emphasizes that cash flow, not profits, is most important when evaluating investments as cash indicates when money is actually received. The fifth principle explains that it is difficult to find exceptionally profitable projects due to competition driving down prices and profits over time in efficient markets.
This document defines and discusses key concepts related to investments including direct investing, investment analysis, portfolio management, and money markets. It defines direct investment as investing in controlling interests of foreign businesses. Investment analysis evaluates investments for profitability and risk, while portfolio management determines optimal investment mixes. The document also defines money markets as markets for short-term financial instruments like treasury bills, certificates of deposit, commercial paper, repurchase agreements, and corporate bonds. It explains that money markets are used for short-term borrowing and lending.
This document discusses various investment strategies and asset classes for growing wealth over the long term, including equities, property, bonds, asset allocation funds, and the benefits of each. It emphasizes that investing for growth requires having exposure to growth assets like equities and property through a portfolio in order to beat inflation. It also stresses the importance of patience, planning, diversification, and a long-term perspective to achieve the best returns when investing.
7 Doable Ways to Become a Billionaire
Invest in stocks and mutual funds. ...
Start your own business. ...
Purchase property in high-value areas and rent it out. ...
Create a product or service that is in high demand and has low competition. ...
Create opportunities. ...
Find a high-paying and stable job. ...
Maintain your wealth
Don't: Think You Know It All
The moment you think you have nothing left to learn is the moment you kill your potential for becoming a billionaire. Especially if you're interested in building your wealth through inventing or innovating, you have to be curious, open-minded, and always learning. Those qualities allow you to look at old things in a new way, to see the potential for change and profit where others see only what already had been done.
Don't: Make Flashy Investments
The latest and greatest investment opportunity may be fun to talk about, but one of the pitfalls of would-be billionaires is to jump in on the "next big thing," which doesn't always turn out to be so big. Investors who make billions from their investments avoid flashy, fun, and high-risk picks and instead choose those with long-term potential to provide great returns. Real estate, energy, steel, telecommunications, pharmaceuticals, and energy are among the picks, while high-tech and intriguing but risky options may go either way.
7
Don't: Quit Too Soon
Entrepreneurial types who succeed realize that success rarely comes overnight. One business idea might not pay off, but the next might. It's not easy to build something from scratch, especially when your something is a fortune of billions. Time is on your side if you don't rush it.
It isn't easy to become a billionaire especially if you haven't already made millions. You will need time, patience, investment savvy, and entrepreneurship to become a billionaire unless you are born into a family with billions that you stand to inherit.
Asset class investing is a passive investment approach that focuses on allocating investments across broad asset classes rather than individual stocks or sectors. It draws on academic research showing that asset allocation has a great impact on returns, and that focusing on pre-defined asset classes can provide truer market returns than alternative strategies. The document discusses how asset class investing works to simplify the investment process for investors by focusing on large institutional funds designed for specific asset classes.
The document provides an overview of 10 popular stock-picking strategies: fundamental analysis, qualitative analysis, value investing, growth investing, GARP investing, income investing, CANSLIM, Dogs of the Dow, and technical analysis. It discusses the importance of analyzing both quantitative and qualitative factors about a company to determine its intrinsic value and whether its stock is under or overvalued. While there is no foolproof strategy, these approaches can be effective if used appropriately based on an investor's goals and risk tolerance.
Dato’ Yau is a chartered accountant and has more than 30 years experience in auditing, corporate finance and general management. Prior to joining Tropicana as the Group Chief Executive Officer, he was with Hong Leong Industries Bhd where he served as group managing director since September 2011 and prior to that, he was Sunway Holdings Bhd managing director since April 2001. He has also served well in various Sunway Group Berhad.
This document provides guidance on selecting mutual fund schemes. It discusses the importance of defining investment goals, assessing risk appetite and time horizon to determine suitable scheme categories. It then covers factors to consider when selecting fund houses and schemes such as performance track record, consistency, portfolio attributes and risks. The document emphasizes that asset allocation based on goals and risk profile is more important than timing or selecting individual schemes. Overall, the document outlines a process for investors to methodically choose mutual fund schemes that match their objectives and risk tolerance.
Ten principles that form the foundations of financial managementNur Dalila Zamri
The document outlines 10 principles that form the foundations of financial management. The first principle discusses the relationship between risk and return, noting that investors will only take on additional risk if there is potential for higher return. The third principle emphasizes that cash flow, not profits, is most important when evaluating investments as cash indicates when money is actually received. The fifth principle explains that it is difficult to find exceptionally profitable projects due to competition driving down prices and profits over time in efficient markets.
This document defines and discusses key concepts related to investments including direct investing, investment analysis, portfolio management, and money markets. It defines direct investment as investing in controlling interests of foreign businesses. Investment analysis evaluates investments for profitability and risk, while portfolio management determines optimal investment mixes. The document also defines money markets as markets for short-term financial instruments like treasury bills, certificates of deposit, commercial paper, repurchase agreements, and corporate bonds. It explains that money markets are used for short-term borrowing and lending.
This document discusses various investment strategies and asset classes for growing wealth over the long term, including equities, property, bonds, asset allocation funds, and the benefits of each. It emphasizes that investing for growth requires having exposure to growth assets like equities and property through a portfolio in order to beat inflation. It also stresses the importance of patience, planning, diversification, and a long-term perspective to achieve the best returns when investing.
7 Doable Ways to Become a Billionaire
Invest in stocks and mutual funds. ...
Start your own business. ...
Purchase property in high-value areas and rent it out. ...
Create a product or service that is in high demand and has low competition. ...
Create opportunities. ...
Find a high-paying and stable job. ...
Maintain your wealth
Don't: Think You Know It All
The moment you think you have nothing left to learn is the moment you kill your potential for becoming a billionaire. Especially if you're interested in building your wealth through inventing or innovating, you have to be curious, open-minded, and always learning. Those qualities allow you to look at old things in a new way, to see the potential for change and profit where others see only what already had been done.
Don't: Make Flashy Investments
The latest and greatest investment opportunity may be fun to talk about, but one of the pitfalls of would-be billionaires is to jump in on the "next big thing," which doesn't always turn out to be so big. Investors who make billions from their investments avoid flashy, fun, and high-risk picks and instead choose those with long-term potential to provide great returns. Real estate, energy, steel, telecommunications, pharmaceuticals, and energy are among the picks, while high-tech and intriguing but risky options may go either way.
7
Don't: Quit Too Soon
Entrepreneurial types who succeed realize that success rarely comes overnight. One business idea might not pay off, but the next might. It's not easy to build something from scratch, especially when your something is a fortune of billions. Time is on your side if you don't rush it.
It isn't easy to become a billionaire especially if you haven't already made millions. You will need time, patience, investment savvy, and entrepreneurship to become a billionaire unless you are born into a family with billions that you stand to inherit.
Asset class investing is a passive investment approach that focuses on allocating investments across broad asset classes rather than individual stocks or sectors. It draws on academic research showing that asset allocation has a great impact on returns, and that focusing on pre-defined asset classes can provide truer market returns than alternative strategies. The document discusses how asset class investing works to simplify the investment process for investors by focusing on large institutional funds designed for specific asset classes.
The document provides an overview of 10 popular stock-picking strategies: fundamental analysis, qualitative analysis, value investing, growth investing, GARP investing, income investing, CANSLIM, Dogs of the Dow, and technical analysis. It discusses the importance of analyzing both quantitative and qualitative factors about a company to determine its intrinsic value and whether its stock is under or overvalued. While there is no foolproof strategy, these approaches can be effective if used appropriately based on an investor's goals and risk tolerance.
Dato’ Yau is a chartered accountant and has more than 30 years experience in auditing, corporate finance and general management. Prior to joining Tropicana as the Group Chief Executive Officer, he was with Hong Leong Industries Bhd where he served as group managing director since September 2011 and prior to that, he was Sunway Holdings Bhd managing director since April 2001. He has also served well in various Sunway Group Berhad.
This document provides guidance on selecting mutual fund schemes. It discusses the importance of defining investment goals, assessing risk appetite and time horizon to determine suitable scheme categories. It then covers factors to consider when selecting fund houses and schemes such as performance track record, consistency, portfolio attributes and risks. The document emphasizes that asset allocation based on goals and risk profile is more important than timing or selecting individual schemes. Overall, the document outlines a process for investors to methodically choose mutual fund schemes that match their objectives and risk tolerance.
This document provides an overview of different types of stocks and strategies for investing in stocks. It discusses:
- Different categories of stocks including growth stocks, blue-chip stocks, income stocks, cyclical stocks, defensive stocks, value stocks, and speculative stocks.
- Key factors to evaluate when choosing stocks including earnings per share, price-earnings ratio, dividend yield, and book value per share. The document recommends focusing on stocks that meet most of these value criteria.
- Long-term investment strategies like dollar-cost averaging, reinvesting dividends, and avoiding common investor mistakes.
So in summary, the document outlines different stock types, key metrics to evaluate stocks, and long-term
Is Your Advisor Giving You The Information Needed To Succeed? - Investment Op...shirtz14
The document discusses three major types of investments - variable, fixed, and indexed. It states that some investment advisors fail to present all three options to clients. The types define how interest is earned, with variable investments linked to market performance, fixed investments providing guaranteed returns, and indexed investments providing some market upside with downside protection. The document emphasizes getting informed about all the options available.
Chapter 1A Financial Model of the CorporationGey Imag.docxketurahhazelhurst
Chapter 1
A Financial Model of the Corporation
Ge�y Images News/Ge�y Images
Learning Objectives
A�er studying this chapter, you should be able to:
Understand the importance of corporate finance in professional and everyday life.
Iden�fy how products, bonds, stock, and people factor into the opera�on of corpora�ons.
Describe the financial balance sheet, and understand its significance to corporate ac�vity and decision making.
Explain the financial goal of the corpora�on and how it is achieved.
Describe how informa�on asymmetry and the agency problem pose challenges to corpora�ons.
Compare other forms of business organiza�on with corpora�ons, and describe the benefits and drawback of
each.
Ch. 1 Introduction
Chapter 1 is an overview of corporate finance and provides you with important building blocks for the rest of your study of finance. The first sec�on of the chapter describes
why finance is an important part of your business educa�on and why the corpora�on was chosen as the vehicle for studying finance. Next, some important features of
corporate products, bonds, and stocks are discussed, along with characteris�cs of the people whose ac�ons affect corpora�ons. A model of the corpora�on, called the
financial balance sheet, is presented in the third sec�on of the chapter. This model is the centerpiece of Chapter 1 and is designed to assist you in visualizing the financial
concepts and decisions that you will study throughout this book. The fourth sec�on covers the financial goal of the corpora�on—shareholder wealth maximiza�on. Some of
the problems encountered by corpora�ons in a�aining this goal and the effec�veness of corpora�ons as a means of crea�ng wealth are also covered in this sec�on of the
chapter. The influence of society, markets, and government on corpora�ons' ac�vi�es are introduced in the concluding sec�on of the chapter.
Throughout the book are exercises and features to help the readers understand the key concepts of managerial finance. These include:
In Focus Videos. These short videos are at the start of each chapter and cover some of the main points in each chapter, specifically focusing on the Financial Balance
Sheet.
Field Trips. Found throughout the book, these feature boxes have web links to give students a chance to visit related sites to help exemplify concepts and ideas.
Applying Finance. Found throughout the book, these feature boxes provide exercises for students to prac�ce key skills related to managerial finance.
PowerPoint® Slideshows. Found near the end of chapters, these features help students review key topics covered.
Pre and Post Tests. These non-graded self-assessment quizzes are to help students review what points they know and what they need more work on.
Cri�cal thinking ques�ons that guide re ...
Slides for 7 Steps to Help You Multiply Your Net Worth Over The Next 2 Years....Debbie Hezlewood
The document outlines 7 steps to help multiply net worth over the next 2 years, including investing in yourself through skills development, getting out of debt, investing in real estate, stocks/mutual funds, businesses, gold/silver, and saving for retirement. It provides tips for each step such as creating a budget to pay down debt, researching companies before investing in stocks, and understanding the risks of business investments. The overall goal is to take control of finances through various investment strategies and increase wealth over time.
A comprehensive guide book on Savings and InvestmentDeepika Jha
Lean the following with this guidebook -
1. Key differences between Saving and Investment
2. Basics of Investment Planning
3. Financial Plan - Concepts & factors for Success
4. How to plan for your life-stage
Russell Luce • Foresters Equity Services
- Slicing the market: An active manager's view of a complex investment world by Ron Rowland
- Recession job losses finally recovered
- Profit with business valuation (Mark Miehe, SII Investments)
The document discusses asset allocation and provides guidance on how to build an investment portfolio. It defines asset allocation as dividing investments among different asset classes to reduce risk. The key aspects covered include:
- Asset allocation is the most important factor influencing investment returns, accounting for over 90% of results.
- Common asset classes include stocks, bonds, cash, gold, and real estate.
- An individual's asset allocation should consider their goals, risk tolerance, age, income stability, and time horizon rather than just their age.
- The document provides a process for determining one's asset allocation, including assessing if they are more like a stock or bond based on their career and financial situation.
Myths 1 : Performance is Not All
Myths 2 : Cheap is Better
Myths 3 : All Unit Trust Funds are Risky
Myths 4 : Unit Trust Funds Are Too Expensive
Myths 5 : Unit Trust is for Speculation and Short-Term
Fundamental Financial Management instruction manual C1LeSonDai
This document provides an overview and learning objectives for Chapter 1 of a financial management textbook. It discusses key topics like business organization forms, stockholder value, intrinsic vs market stock value, business ethics, executive compensation, and officer responsibilities. The lecture suggestions recommend spending the first day reviewing the syllabus and briefly introducing chapter topics. Students should print slides, buy a calculator, and be prepared to use time value of money concepts from Chapter 2.
This document provides an introduction to investing and key concepts like risk and return. It explains that balancing risk and return is important for achieving financial goals. While higher risk investments offer potential for greater returns, they also carry more uncertainty. The document advocates diversifying investments across different asset classes like stocks, bonds, property and cash to reduce risk. It provides data showing how various asset classes have performed over time, with higher risk assets generally providing higher average returns but also more variability in returns. The key is choosing an appropriate mix of assets based on an individual's risk tolerance and time horizon.
The document provides guidance on personal finance and investing principles. It discusses ten principles of successful investing including knowing your goals and risk tolerance, diversifying your portfolio, investing for the long-term in a tax-efficient manner, and developing and following an investment plan. It also reviews the major asset classes and their historical risk and return profiles to help investors understand appropriate investments for different risk tolerances and time horizons.
How Wealthy People Use Professional Money Managementfreddysaamy
http://ekinsurance.com/financial/money-management/
Just as surgeons don't operate on themselves, wealthy people usually do not invest their own money. They have investment professionals manage their money for them.
The document provides an overview of various investment avenues available in the current financial year. It discusses key concepts like inflation, risk profiling of investors, and strategies for robust investment and financial planning. The objectives are to understand different asset classes and products, and elicit an in-depth coverage of major investment avenues and their performance over the past couple of years to arrive at an optimal asset allocation keeping in mind risk appetite and investment goals. Key investment avenues discussed include equity, debt, mutual funds, real estate, commodities, and more.
1. The document discusses various investment principles and strategies for making good investment decisions with practical examples. It defines different types of investments like stocks, bonds, mutual funds, and real estate.
2. Key principles for investors include starting early, diversifying investments, taking advantage of employer retirement plans and tax benefits, and using low-risk long-term strategies. Discipline, patience, and understanding risk/return are important characteristics for successful investors.
3. The document provides examples of calculating investment values like net present value, share price valuation, and treasury bill face value to illustrate making good investment decisions.
- Stocks represent ownership in a company. Companies issue stock to raise money for growth in a process called equity financing, selling portions of the company. This allows companies to expand without taking on debt.
- Stock prices change based on supply and demand from investors. Prices rise when demand is high and fall when supply is high. Fundamentals like company earnings and future growth expectations also impact investor sentiment and demand.
- While no one can predict with certainty how stock prices will change, prices are generally volatile and can rise or fall rapidly based on investors' shifting expectations of company value.
The document discusses various financial concepts related to investing, saving, and wealth management. It defines the differences between saving and investing, with saving focusing on short-term goals and emergencies while investing aims for long-term growth. It also covers risk management strategies like diversification and dollar cost averaging. Additional topics include cash management, tax planning, credit management, home ownership, retirement planning, and considerations for further education. The document provides information to help readers make informed financial decisions.
The document discusses potential issues with divestment campaigns and other investment solutions for college endowments. It outlines that most endowments are externally managed, making divestment challenging. It also notes that divestment may not address underlying portfolio problems and impacts on different asset classes. The document proposes alternative strategies like sustainable investing, shareholder engagement, and diversifying investments to hedge risks from climate change impacts better than divestment alone.
This document outlines an investment strategy that involves investing in 11 options: the S&P 500 index, 9 sector ETFs that track the different sectors of the S&P 500, and cash. The strategy aims to beat the returns of the S&P 500 index and top performing mutual funds by overallocating to sectors that outperform the overall index and avoiding underperforming sectors. The strategy is presented as simple to implement and backtested data is provided showing it achieved significantly higher returns than the S&P 500 and top mutual funds from 2006-2018.
48407540 project-report-on-portfolio-management-mgt-727 (1)Ritesh Kumar Patro
This document provides an overview of portfolio management. It discusses key concepts like portfolio construction, types of assets, and the portfolio management process. The main points are:
1) Portfolio construction involves setting objectives, defining a policy, applying a strategy, selecting assets, and assessing performance. The main asset classes are cash, bonds, equities, derivatives, and property.
2) Portfolio management deals with security analysis, portfolio analysis, selection, revision, and evaluation. The goal is to maximize returns for a given level of risk through diversification.
3) Derivatives like futures and options derive their value from underlying assets and allow investors to take long or short positions to profit from price movements.
The document provides instructions for writing a 250-300 word paragraph analyzing a specific point from Okakura Kakuzō's essay "The Range of Ideals" to explain why his thesis that "Asia is one" is problematic. The paragraph should directly engage with one point Okakura makes, provide specific details on its logical or factual mistakes, acknowledge the diversity of Asian nations and cultures, and cite the specific page(s) being referred to.
Ralph Waldo Emerson was an American essayist and philosopher born in 1803 who is considered the father of American literature. He developed the philosophy of transcendentalism and emphasized nonconformity, self-reliance, and finding inspiration from nature. Emerson had a profound influence on writers like Thoreau, Whitman, Hawthorne, Poe, and Dickinson and developed a complicated relationship with Thoreau as his former student and friend.
This document provides an overview of different types of stocks and strategies for investing in stocks. It discusses:
- Different categories of stocks including growth stocks, blue-chip stocks, income stocks, cyclical stocks, defensive stocks, value stocks, and speculative stocks.
- Key factors to evaluate when choosing stocks including earnings per share, price-earnings ratio, dividend yield, and book value per share. The document recommends focusing on stocks that meet most of these value criteria.
- Long-term investment strategies like dollar-cost averaging, reinvesting dividends, and avoiding common investor mistakes.
So in summary, the document outlines different stock types, key metrics to evaluate stocks, and long-term
Is Your Advisor Giving You The Information Needed To Succeed? - Investment Op...shirtz14
The document discusses three major types of investments - variable, fixed, and indexed. It states that some investment advisors fail to present all three options to clients. The types define how interest is earned, with variable investments linked to market performance, fixed investments providing guaranteed returns, and indexed investments providing some market upside with downside protection. The document emphasizes getting informed about all the options available.
Chapter 1A Financial Model of the CorporationGey Imag.docxketurahhazelhurst
Chapter 1
A Financial Model of the Corporation
Ge�y Images News/Ge�y Images
Learning Objectives
A�er studying this chapter, you should be able to:
Understand the importance of corporate finance in professional and everyday life.
Iden�fy how products, bonds, stock, and people factor into the opera�on of corpora�ons.
Describe the financial balance sheet, and understand its significance to corporate ac�vity and decision making.
Explain the financial goal of the corpora�on and how it is achieved.
Describe how informa�on asymmetry and the agency problem pose challenges to corpora�ons.
Compare other forms of business organiza�on with corpora�ons, and describe the benefits and drawback of
each.
Ch. 1 Introduction
Chapter 1 is an overview of corporate finance and provides you with important building blocks for the rest of your study of finance. The first sec�on of the chapter describes
why finance is an important part of your business educa�on and why the corpora�on was chosen as the vehicle for studying finance. Next, some important features of
corporate products, bonds, and stocks are discussed, along with characteris�cs of the people whose ac�ons affect corpora�ons. A model of the corpora�on, called the
financial balance sheet, is presented in the third sec�on of the chapter. This model is the centerpiece of Chapter 1 and is designed to assist you in visualizing the financial
concepts and decisions that you will study throughout this book. The fourth sec�on covers the financial goal of the corpora�on—shareholder wealth maximiza�on. Some of
the problems encountered by corpora�ons in a�aining this goal and the effec�veness of corpora�ons as a means of crea�ng wealth are also covered in this sec�on of the
chapter. The influence of society, markets, and government on corpora�ons' ac�vi�es are introduced in the concluding sec�on of the chapter.
Throughout the book are exercises and features to help the readers understand the key concepts of managerial finance. These include:
In Focus Videos. These short videos are at the start of each chapter and cover some of the main points in each chapter, specifically focusing on the Financial Balance
Sheet.
Field Trips. Found throughout the book, these feature boxes have web links to give students a chance to visit related sites to help exemplify concepts and ideas.
Applying Finance. Found throughout the book, these feature boxes provide exercises for students to prac�ce key skills related to managerial finance.
PowerPoint® Slideshows. Found near the end of chapters, these features help students review key topics covered.
Pre and Post Tests. These non-graded self-assessment quizzes are to help students review what points they know and what they need more work on.
Cri�cal thinking ques�ons that guide re ...
Slides for 7 Steps to Help You Multiply Your Net Worth Over The Next 2 Years....Debbie Hezlewood
The document outlines 7 steps to help multiply net worth over the next 2 years, including investing in yourself through skills development, getting out of debt, investing in real estate, stocks/mutual funds, businesses, gold/silver, and saving for retirement. It provides tips for each step such as creating a budget to pay down debt, researching companies before investing in stocks, and understanding the risks of business investments. The overall goal is to take control of finances through various investment strategies and increase wealth over time.
A comprehensive guide book on Savings and InvestmentDeepika Jha
Lean the following with this guidebook -
1. Key differences between Saving and Investment
2. Basics of Investment Planning
3. Financial Plan - Concepts & factors for Success
4. How to plan for your life-stage
Russell Luce • Foresters Equity Services
- Slicing the market: An active manager's view of a complex investment world by Ron Rowland
- Recession job losses finally recovered
- Profit with business valuation (Mark Miehe, SII Investments)
The document discusses asset allocation and provides guidance on how to build an investment portfolio. It defines asset allocation as dividing investments among different asset classes to reduce risk. The key aspects covered include:
- Asset allocation is the most important factor influencing investment returns, accounting for over 90% of results.
- Common asset classes include stocks, bonds, cash, gold, and real estate.
- An individual's asset allocation should consider their goals, risk tolerance, age, income stability, and time horizon rather than just their age.
- The document provides a process for determining one's asset allocation, including assessing if they are more like a stock or bond based on their career and financial situation.
Myths 1 : Performance is Not All
Myths 2 : Cheap is Better
Myths 3 : All Unit Trust Funds are Risky
Myths 4 : Unit Trust Funds Are Too Expensive
Myths 5 : Unit Trust is for Speculation and Short-Term
Fundamental Financial Management instruction manual C1LeSonDai
This document provides an overview and learning objectives for Chapter 1 of a financial management textbook. It discusses key topics like business organization forms, stockholder value, intrinsic vs market stock value, business ethics, executive compensation, and officer responsibilities. The lecture suggestions recommend spending the first day reviewing the syllabus and briefly introducing chapter topics. Students should print slides, buy a calculator, and be prepared to use time value of money concepts from Chapter 2.
This document provides an introduction to investing and key concepts like risk and return. It explains that balancing risk and return is important for achieving financial goals. While higher risk investments offer potential for greater returns, they also carry more uncertainty. The document advocates diversifying investments across different asset classes like stocks, bonds, property and cash to reduce risk. It provides data showing how various asset classes have performed over time, with higher risk assets generally providing higher average returns but also more variability in returns. The key is choosing an appropriate mix of assets based on an individual's risk tolerance and time horizon.
The document provides guidance on personal finance and investing principles. It discusses ten principles of successful investing including knowing your goals and risk tolerance, diversifying your portfolio, investing for the long-term in a tax-efficient manner, and developing and following an investment plan. It also reviews the major asset classes and their historical risk and return profiles to help investors understand appropriate investments for different risk tolerances and time horizons.
How Wealthy People Use Professional Money Managementfreddysaamy
http://ekinsurance.com/financial/money-management/
Just as surgeons don't operate on themselves, wealthy people usually do not invest their own money. They have investment professionals manage their money for them.
The document provides an overview of various investment avenues available in the current financial year. It discusses key concepts like inflation, risk profiling of investors, and strategies for robust investment and financial planning. The objectives are to understand different asset classes and products, and elicit an in-depth coverage of major investment avenues and their performance over the past couple of years to arrive at an optimal asset allocation keeping in mind risk appetite and investment goals. Key investment avenues discussed include equity, debt, mutual funds, real estate, commodities, and more.
1. The document discusses various investment principles and strategies for making good investment decisions with practical examples. It defines different types of investments like stocks, bonds, mutual funds, and real estate.
2. Key principles for investors include starting early, diversifying investments, taking advantage of employer retirement plans and tax benefits, and using low-risk long-term strategies. Discipline, patience, and understanding risk/return are important characteristics for successful investors.
3. The document provides examples of calculating investment values like net present value, share price valuation, and treasury bill face value to illustrate making good investment decisions.
- Stocks represent ownership in a company. Companies issue stock to raise money for growth in a process called equity financing, selling portions of the company. This allows companies to expand without taking on debt.
- Stock prices change based on supply and demand from investors. Prices rise when demand is high and fall when supply is high. Fundamentals like company earnings and future growth expectations also impact investor sentiment and demand.
- While no one can predict with certainty how stock prices will change, prices are generally volatile and can rise or fall rapidly based on investors' shifting expectations of company value.
The document discusses various financial concepts related to investing, saving, and wealth management. It defines the differences between saving and investing, with saving focusing on short-term goals and emergencies while investing aims for long-term growth. It also covers risk management strategies like diversification and dollar cost averaging. Additional topics include cash management, tax planning, credit management, home ownership, retirement planning, and considerations for further education. The document provides information to help readers make informed financial decisions.
The document discusses potential issues with divestment campaigns and other investment solutions for college endowments. It outlines that most endowments are externally managed, making divestment challenging. It also notes that divestment may not address underlying portfolio problems and impacts on different asset classes. The document proposes alternative strategies like sustainable investing, shareholder engagement, and diversifying investments to hedge risks from climate change impacts better than divestment alone.
This document outlines an investment strategy that involves investing in 11 options: the S&P 500 index, 9 sector ETFs that track the different sectors of the S&P 500, and cash. The strategy aims to beat the returns of the S&P 500 index and top performing mutual funds by overallocating to sectors that outperform the overall index and avoiding underperforming sectors. The strategy is presented as simple to implement and backtested data is provided showing it achieved significantly higher returns than the S&P 500 and top mutual funds from 2006-2018.
48407540 project-report-on-portfolio-management-mgt-727 (1)Ritesh Kumar Patro
This document provides an overview of portfolio management. It discusses key concepts like portfolio construction, types of assets, and the portfolio management process. The main points are:
1) Portfolio construction involves setting objectives, defining a policy, applying a strategy, selecting assets, and assessing performance. The main asset classes are cash, bonds, equities, derivatives, and property.
2) Portfolio management deals with security analysis, portfolio analysis, selection, revision, and evaluation. The goal is to maximize returns for a given level of risk through diversification.
3) Derivatives like futures and options derive their value from underlying assets and allow investors to take long or short positions to profit from price movements.
The document provides instructions for writing a 250-300 word paragraph analyzing a specific point from Okakura Kakuzō's essay "The Range of Ideals" to explain why his thesis that "Asia is one" is problematic. The paragraph should directly engage with one point Okakura makes, provide specific details on its logical or factual mistakes, acknowledge the diversity of Asian nations and cultures, and cite the specific page(s) being referred to.
Ralph Waldo Emerson was an American essayist and philosopher born in 1803 who is considered the father of American literature. He developed the philosophy of transcendentalism and emphasized nonconformity, self-reliance, and finding inspiration from nature. Emerson had a profound influence on writers like Thoreau, Whitman, Hawthorne, Poe, and Dickinson and developed a complicated relationship with Thoreau as his former student and friend.
Raising Minimum An explanation of the its.docxbkbk37
This document discusses the key components of an essay arguing for or against raising the minimum wage. The essay would provide an explanation of the controversy around raising the minimum wage, including the background and current state of the issue. It would articulate a clear position and support that position with reasons backed by evidence from research. The essay would also have to address counterarguments and refute them with detailed rebuttals. It would conclude by restating the main argument and possibly suggesting a solution or policy. Sources would need to be cited in MLA style and include at least 5 non-internet sources.
Rail Project A goal of the Obama administration.docxbkbk37
The Obama administration promoted high-speed rail projects across major US states to adopt more environmentally friendly transportation initiatives and improve infrastructure. California accepted billions in federal grants to begin developing a high-speed rail line, though critics argue the projected ridership and costs make the project economically unfeasible, especially given California's budget issues. Supporters counter that large public works projects can have broader economic and social benefits beyond just transportation.
Racism toward Indigenous peoples in Canada.docxbkbk37
The document outlines requirements for an 8-page research paper examining racism toward Indigenous peoples in Canada. It must be in Chicago style with footnotes and bibliography, and discuss the prevalence of racism today, key contributing factors, and the concepts of meritocracy and white privilege in developing the thesis. Specifically, it should consider how beliefs about meritocracy factor into racist attitudes, the lack of understanding of white privilege and its impact, and how understanding these concepts could foster more inclusive attitudes. Five sources are required including the article by Brockham and Morrison.
This document provides instructions for a social issue paper on class, race and gender. Students must write a thesis statement and support it using at least 3 sources from the provided additional material. The paper must be formatted in MLA style and clearly relate to topics covered in the course.
The document discusses whether the Responsibility to Protect (R2P) doctrine could justify international intervention in Syria. Some argue multilateral attacks on Syria could be legitimate under R2P based on the requirements being met. However, many UN member states remain suspicious of R2P due to concerns it could be used to justify improper unilateral military action.
This article discusses racial disparities in hospital segregation in Jackson, Mississippi in the 1960s. It describes how the city's black community organized protests and filed lawsuits to desegregate white hospitals and gain equal access to healthcare. While progress was made through these efforts, racial inequities still persisted in the quality of facilities and treatment between black and white patients. The article provides insights into the political and social challenges of promoting desegregation and reducing healthcare disparities during the Civil Rights era.
Race alone is an inadequate category for studying labor histories because it does not account for other factors like gender. When telephone operator jobs transformed from predominantly white to black workers, African American women faced discrimination and stereotyping in their roles. Bell System's hiring policies and perceptions of black women were guided by wider societal racism and sexism. Bell publications portrayed African Americans in stereotypical, demeaning ways. The New York Telephone Company initially refused to hire African Americans in 1920 due to concerns about customer prejudice, and again in the 1930s during a period of high unemployment that exacerbated racial tensions. Prior to 1940, AT&T had very limited hiring of African American women for telephone operator jobs. The Civil Rights era prompted changes to Bell
QuickBooks uses windows API to follow orders to get updates.docxbkbk37
QuickBooks uses the Windows API to connect to Intuit servers to receive updates and data. Error code 12057 can occur if QuickBooks is unable to connect to the Intuit servers. This error may be caused by issues with the internet connection, outdated SSL settings, or incorrect date/time settings. The document provides steps to resolve this error such as checking internet options settings, updating the system date and time, installing Windows and QuickBooks updates, repairing the QuickBooks installation, and running QuickBooks as an administrator. Customer support should be contacted if the error persists after trying these troubleshooting steps.
Questions What are the purposes of Just.docxbkbk37
Offenders' cognitions serve to both make themselves feel better and balance their interactions with others and environments. Childhood trauma can influence offenders' distorted views of social reality. The psychological source of mental conflicts is examined. Prejudice is discussed as influencing criminal behavior, and whether one is prejudiced towards sex offenders. The main assessment activities and issues in correctional counseling are outlined. Issues in the termination stage and types of questions to avoid in assessment are identified. The importance of helping clients with feelings and defining beneficence vs. nonmaleficence are discussed. The benefit of motivational interviewing is also examined.
Questions to Each group you read about is.docxbkbk37
Several immigrant groups in 19th century America felt anxiety over changes brought by new immigrants. Mexicans/Tejanos, Texans, and Americans feared losing land and political power to increasing numbers of newcomers. Irish, German, and Chinese immigrants also faced xenophobia and fears that they would take economic opportunities and alter American culture. These documents from the Age of Expansion show prevalent fears and distrust of foreigners among native-born Americans.
Questions that must be answered in your plus other.docxbkbk37
This document outlines 4 questions to answer in a book report: 1) The 4 big ideas in the book. 2) How the book got its title. 3) What happens to the main character at the end. 4) What is liked most about the book. It provides guidance on the content to include in the writeup.
This woman finds meaning and purpose in her family and faith. She draws strength from her family, friends, and faith in God. She believes things happen for a reason and has hope for the future. She serves on the board of her church and a cemetery organization, which she finds rewarding as it allows her to help others and make a positive difference. Her most important belief is her faith in God, and she prays daily and is thankful for her blessings. She has tried to pass on her faith and values to her daughter.
Question Libya recently announced that it is claiming a.docxbkbk37
Libya claimed a 200-mile territorial sea zone, placing armed ships to enforce the claim and calling it a "line of death." The UN Security Council condemned Libya's actions as violating international law, which only recognizes 12 nautical miles of territorial waters. Authorized by Congress, the US sent ships and jets to patrol the 200-mile zone. After a Libyan ship fired at a US jet, US forces returned fire and destroyed two Libyan ships.
Question Use the Internet or the IGlobal Resource.docxbkbk37
This document provides instructions for two questions. Question 1 asks the reader to research scientific testing procedures and write the steps to provide evidence for a scientific claim. Question 2 asks the reader to watch a NASA video about detecting methane on Mars, discuss the challenges of collecting data on Mars, and how NASA is working to overcome these challenges. The reader is instructed to submit their responses in a Word document before a deadline.
Question Please define motivation and discuss why it is.docxbkbk37
Motivation is an important factor in educating adult learners because it influences their willingness to learn. Sociocultural factors like cultural conditions can impact adult learners' needs, with some conditions more significant than others. Adults choose to learn based on access and opportunity, which influence their learning along with enhancing formal and non-formal learning activities. Neuroandragogy and andragogy are approaches to adult learning, with neuroandragogy incorporating brain research which is important to understanding adult learning and development.
Question share your perspective on personal data as a.docxbkbk37
Personal data has become a product that is collected and sold by companies, but individuals should maintain ownership over their own data. While data collection can enable useful services, people should give informed consent and have transparency about how their information is used. There are ongoing debates around balancing corporate interests, individual privacy and control, and developing policies that ensure data is handled ethically.
The document asks the reader to write a 1000+ word paper in APA format that supports the death penalty for certain crimes like rape of children, kidnapping, and torture. The paper must use at least 3 academic sources and include a word count. The reader is asked to argue that they agree with using the death penalty in cases involving those severe crimes.
Question In your what are the main workforce.docxbkbk37
The main workforce challenges facing the United States are adequate healthcare staffing and shortages of skilled professionals. The COVID-19 pandemic has exacerbated longstanding shortages and strained hospital resources. A future model of care delivery in the US must ensure adequate financing and a skilled mobile healthcare workforce. Mobile health clinics and teams of clinicians and health coaches could help increase access to affordable, tailored care that responds to community needs. However, this requires sufficient training and funding support to be successful.
LAND USE LAND COVER AND NDVI OF MIRZAPUR DISTRICT, UPRAHUL
This Dissertation explores the particular circumstances of Mirzapur, a region located in the
core of India. Mirzapur, with its varied terrains and abundant biodiversity, offers an optimal
environment for investigating the changes in vegetation cover dynamics. Our study utilizes
advanced technologies such as GIS (Geographic Information Systems) and Remote sensing to
analyze the transformations that have taken place over the course of a decade.
The complex relationship between human activities and the environment has been the focus
of extensive research and worry. As the global community grapples with swift urbanization,
population expansion, and economic progress, the effects on natural ecosystems are becoming
more evident. A crucial element of this impact is the alteration of vegetation cover, which plays a
significant role in maintaining the ecological equilibrium of our planet.Land serves as the foundation for all human activities and provides the necessary materials for
these activities. As the most crucial natural resource, its utilization by humans results in different
'Land uses,' which are determined by both human activities and the physical characteristics of the
land.
The utilization of land is impacted by human needs and environmental factors. In countries
like India, rapid population growth and the emphasis on extensive resource exploitation can lead
to significant land degradation, adversely affecting the region's land cover.
Therefore, human intervention has significantly influenced land use patterns over many
centuries, evolving its structure over time and space. In the present era, these changes have
accelerated due to factors such as agriculture and urbanization. Information regarding land use and
cover is essential for various planning and management tasks related to the Earth's surface,
providing crucial environmental data for scientific, resource management, policy purposes, and
diverse human activities.
Accurate understanding of land use and cover is imperative for the development planning
of any area. Consequently, a wide range of professionals, including earth system scientists, land
and water managers, and urban planners, are interested in obtaining data on land use and cover
changes, conversion trends, and other related patterns. The spatial dimensions of land use and
cover support policymakers and scientists in making well-informed decisions, as alterations in
these patterns indicate shifts in economic and social conditions. Monitoring such changes with the
help of Advanced technologies like Remote Sensing and Geographic Information Systems is
crucial for coordinated efforts across different administrative levels. Advanced technologies like
Remote Sensing and Geographic Information Systems
9
Changes in vegetation cover refer to variations in the distribution, composition, and overall
structure of plant communities across different temporal and spatial scales. These changes can
occur natural.
How to Manage Your Lost Opportunities in Odoo 17 CRMCeline George
Odoo 17 CRM allows us to track why we lose sales opportunities with "Lost Reasons." This helps analyze our sales process and identify areas for improvement. Here's how to configure lost reasons in Odoo 17 CRM
This presentation was provided by Steph Pollock of The American Psychological Association’s Journals Program, and Damita Snow, of The American Society of Civil Engineers (ASCE), for the initial session of NISO's 2024 Training Series "DEIA in the Scholarly Landscape." Session One: 'Setting Expectations: a DEIA Primer,' was held June 6, 2024.
it describes the bony anatomy including the femoral head , acetabulum, labrum . also discusses the capsule , ligaments . muscle that act on the hip joint and the range of motion are outlined. factors affecting hip joint stability and weight transmission through the joint are summarized.
ISO/IEC 27001, ISO/IEC 42001, and GDPR: Best Practices for Implementation and...PECB
Denis is a dynamic and results-driven Chief Information Officer (CIO) with a distinguished career spanning information systems analysis and technical project management. With a proven track record of spearheading the design and delivery of cutting-edge Information Management solutions, he has consistently elevated business operations, streamlined reporting functions, and maximized process efficiency.
Certified as an ISO/IEC 27001: Information Security Management Systems (ISMS) Lead Implementer, Data Protection Officer, and Cyber Risks Analyst, Denis brings a heightened focus on data security, privacy, and cyber resilience to every endeavor.
His expertise extends across a diverse spectrum of reporting, database, and web development applications, underpinned by an exceptional grasp of data storage and virtualization technologies. His proficiency in application testing, database administration, and data cleansing ensures seamless execution of complex projects.
What sets Denis apart is his comprehensive understanding of Business and Systems Analysis technologies, honed through involvement in all phases of the Software Development Lifecycle (SDLC). From meticulous requirements gathering to precise analysis, innovative design, rigorous development, thorough testing, and successful implementation, he has consistently delivered exceptional results.
Throughout his career, he has taken on multifaceted roles, from leading technical project management teams to owning solutions that drive operational excellence. His conscientious and proactive approach is unwavering, whether he is working independently or collaboratively within a team. His ability to connect with colleagues on a personal level underscores his commitment to fostering a harmonious and productive workplace environment.
Date: May 29, 2024
Tags: Information Security, ISO/IEC 27001, ISO/IEC 42001, Artificial Intelligence, GDPR
-------------------------------------------------------------------------------
Find out more about ISO training and certification services
Training: ISO/IEC 27001 Information Security Management System - EN | PECB
ISO/IEC 42001 Artificial Intelligence Management System - EN | PECB
General Data Protection Regulation (GDPR) - Training Courses - EN | PECB
Webinars: https://pecb.com/webinars
Article: https://pecb.com/article
-------------------------------------------------------------------------------
For more information about PECB:
Website: https://pecb.com/
LinkedIn: https://www.linkedin.com/company/pecb/
Facebook: https://www.facebook.com/PECBInternational/
Slideshare: http://www.slideshare.net/PECBCERTIFICATION
বাংলাদেশের অর্থনৈতিক সমীক্ষা ২০২৪ [Bangladesh Economic Review 2024 Bangla.pdf] কম্পিউটার , ট্যাব ও স্মার্ট ফোন ভার্সন সহ সম্পূর্ণ বাংলা ই-বুক বা pdf বই " সুচিপত্র ...বুকমার্ক মেনু 🔖 ও হাইপার লিংক মেনু 📝👆 যুক্ত ..
আমাদের সবার জন্য খুব খুব গুরুত্বপূর্ণ একটি বই ..বিসিএস, ব্যাংক, ইউনিভার্সিটি ভর্তি ও যে কোন প্রতিযোগিতা মূলক পরীক্ষার জন্য এর খুব ইম্পরট্যান্ট একটি বিষয় ...তাছাড়া বাংলাদেশের সাম্প্রতিক যে কোন ডাটা বা তথ্য এই বইতে পাবেন ...
তাই একজন নাগরিক হিসাবে এই তথ্য গুলো আপনার জানা প্রয়োজন ...।
বিসিএস ও ব্যাংক এর লিখিত পরীক্ষা ...+এছাড়া মাধ্যমিক ও উচ্চমাধ্যমিকের স্টুডেন্টদের জন্য অনেক কাজে আসবে ...
Strategies for Effective Upskilling is a presentation by Chinwendu Peace in a Your Skill Boost Masterclass organisation by the Excellence Foundation for South Sudan on 08th and 09th June 2024 from 1 PM to 3 PM on each day.
Executive Directors Chat Leveraging AI for Diversity, Equity, and InclusionTechSoup
Let’s explore the intersection of technology and equity in the final session of our DEI series. Discover how AI tools, like ChatGPT, can be used to support and enhance your nonprofit's DEI initiatives. Participants will gain insights into practical AI applications and get tips for leveraging technology to advance their DEI goals.
The simplified electron and muon model, Oscillating Spacetime: The Foundation...RitikBhardwaj56
Discover the Simplified Electron and Muon Model: A New Wave-Based Approach to Understanding Particles delves into a groundbreaking theory that presents electrons and muons as rotating soliton waves within oscillating spacetime. Geared towards students, researchers, and science buffs, this book breaks down complex ideas into simple explanations. It covers topics such as electron waves, temporal dynamics, and the implications of this model on particle physics. With clear illustrations and easy-to-follow explanations, readers will gain a new outlook on the universe's fundamental nature.
1. (Mt) – Disscusion Board
UNIT I STUDY GUIDE The Financial Environment Course Learning Outcomes for Unit I Upon
completion of this unit, students should be able to: 1. Explain foundational finance theories.
1.1 Discuss the meaning of finance and how it affects the business environment. 1.2 Explain
the trade-off between risk and return. 1.3 Analyze a recent financial crisis to include why it
occurred and how it could have been prevented. 2. Analyze a financial forecast using
relevant data. 2.1 Explore the use of forecasts and financial tools for planning. Course/Unit
Learning Outcomes 1.1 1.2 1.3 2.1 Learning Activity Unit Lesson Chapter 1 Unit I
Assessment Unit Lesson Chapter 1 Unit I Assessment Unit Lesson Chapter 1 Unit I
Assessment Unit Lesson Chapter 1 Chapter 2 Unit I Assessment Required Unit Resources
Chapter 1: The Financial Environment Chapter 2: Money and the Monetary System Unit
Lesson Welcome to the course! In this first unit, we will focus on the basics of the financial
environment as well as the monetary system. While most of us are impacted by finance
every day, very few of us realize how important it is to understand and appreciate this field
of business. The material in this unit concentrates on the six principles of finance in addition
to creating an overview of the financial system. Each of the principles will be explored as we
focus on their contributions to not only the field of business but to the marketplace. BBA
3301, Financial Management 1 Time Value of Money UNIT x STUDY GUIDE Title Higher risk
The first principle of finance is the time value of Money has a time money. Yes, this is a
broad concept, but the time should lead to value value of money simply means a dollar
received higher returns today is more valuable than a dollar received one year from now.
This is because we can invest the dollar we have today to earn interest so that at the end of
one year, we will have more than one dollar. In other words, money has time value. For
Diversification Markets are instance, suppose you have a choice of receiving reduces risk
efficient in pricing $1,000 either today or one year from today. If you decide to receive it a
year from now, you will have passed up the opportunity to earn a year’s interest on the
money. In other words, you would have suffered an opportunity loss/cost. The cost
Managers and is the interest you could have earned on the Reputation stockholders may
$1,000 if you invested it for one year. The only way to combat the time value of money is to
have different matters invest the money into securities, savings, etc. priorities There are
many external factors that influence the value of money including inflation, political The six
principles of finance and economic factors, the cost of living, Gross (Melicher & Norton,
2017) Domestic Product (GDP), and the strength or weakness of the currency. We will visit
the time value of money concept throughout the course as we utilize methods such as the
2. Net Present Value (NPV) method to evaluate investments. This short video is a great review
of the time value of money concept. The video explores how the concept functions and who
is impacted. Wall Street Survivor. (2015, July 28). Time value of money [Video file].
Retrieved from https://www.youtube.com/watch?v=1CO5hf2ns18 When we think about
the time value of money, we focus on the measurement of value. To measure value, we use
the concept of time value of money to bring the future benefits and costs of a project,
measured by its cash flows, back to the present. Then, if the benefits or inflow of cash is
greater than the costs, the project is beneficial and should be taken on. If, on the other hand,
the benefits or inflow of cash is outweighed by the costs, the project is not a good choice for
the organization. If the time value of money is not recognized, there is no way that projects
can be evaluated in a meaningful way. We will learn more about the time value of money in
Unit IV. Risk and Return One has to consider the tradeoff that exists between risk and
return. With so many investment opportunities available, one has to consider not only the
risk involved but also the return that is expected on the investment. Why would you make
an investment that would not at least pay you something for delaying consumption? You
would not, even if there is no risk. In fact, investors will want to receive at least the same
return that is available for risk-free investments, such as the rate of return being earned on
U.S. government securities. While no one likes to face risk, it is part of doing business. Risky
investments are less attractive unless they offer the likelihood of higher returns. Thus, the
more unsure people are about how an investment will perform, the higher the return they
will demand for making the investment. So, if you are trying to persuade investors to put
money into a risky venture you are pursuing, then you will have to offer a higher expected
rate of return to lure them in. Keep in mind that expected rate of return and actual return
are not the same thing. As an investor, you have expectations about what returns you will
earn. However, you will not know for certain what they return will be. For instance, if
investors could have seen into the future, no one would have bought stock in the women’s
retailer Ann Taylor Stores in 2009. In March of 2009, the company announced a larger-
than-expected fourth BBA 3301, Financial Management 2 quarter loss. The result was that,
within minutes of the announcement, the firm’s stock price dropped UNIT x STUDY GUIDE a
staggering 38% (Cheng, 2009). Title Diversification Diversification is another key point to
consider. This concept simply means that you do not invest all of your money into one
account. Instead, you spread out the investment across multiple investments such as mutual
funds, stock, bonds, or certificates of deposit (CDs). When you diversify, you divide your
money into multiple investments. (Nexusby, n.d.) Assume you invested in two stocks, Apple
and Sears. Ten years after your investment, you decide to check on how your investments
are doing. You bought Apple stock for $10 and the stock is now trading at almost $45. Then,
you look at the Sears stock and see that the stock is selling at $5 but you paid $25 per share.
Clearly, the Apple stock is performing better. The stock value changed over time due to
operations, performance, and market trends, among other things. Ideally, you would have
invested all the funds in the Apple stock, but the uncertainty of how the stock would do is
part of the inherent risk in investing. We are risk averse! We would like to reduce the risk
associated with our investment portfolio without having to accept lower expected returns.
Thank goodness for diversification because that is the best way of managing risk! Take a
3. few minutes to view the short video below. It summarizes risk diversification and explores
its significance. Fidelity Investments. (2015, December 4). What’s diversification [Video
file]. Retrieved from https://www.youtube.com/watch?v=LU8tubkz_Fg Market Efficiency
An efficient market is one in which the prices of assets traded fully reflect the value based
on everything known at the time. Whether a security market such as the National
Association of Securities Dealers Automated Quotations (NASDAQ) is efficient depends on
the speed with which newly released information impacts prices. In other words, an
efficient stock market is characterized by a large number of profit-driven individuals who
act quickly by buying/selling shares of stock based on new information. For instance, while
Nike CEO William Perez flew aboard the company’s Gulfstream one day in November 2005,
traders on the ground sold off a major amount of Nike’s stock. Why? Because the plane’s
landing gear was malfunctioning, and they were watching TV coverage of the event as it was
happening! Before the CEO landed safely, Nike’s stock dropped by almost 2% (Cain, 2005).
Once Perez’s plane landed, Nike’s stock price bounced back. This example illustrates just
how time-sensitive trading and valuation can be. Management Versus Owner Perspectives
Another principle to study is the conflict of interest between management and the owners.
Managers might have goals that are different than the owners, and these goals might lead to
decisions that decrease the overall value of the firm. When it happens, it is mainly because
the manager’s own interest is best served by ignoring shareholder interests. Thus, there is a
conflict of interest between what is best for the managers and the stockholders. For
instance, it may be the case that shutting down an unprofitable plan is in the best interests
of the firm’s stockholders, but in doing so, the managers will find themselves out of a job or
having to transfer to a different job. This conflict of interest could lead the management of
the plant to continue running the plant at a loss. BBA 3301, Financial Management 3
Further, managers might decide to avoid projects that have risk associated with them, even
if GUIDE they are great UNIT x STUDY projects with huge potential returns and a small
chance of failure. Why is this?Title Well, if the project does not turn out to be successful,
these agents of the shareholders may lose their jobs. The costs associated with this conflict
can percolate into the marketplace. If the market feels management is damaging
shareholder wealth, there may be a positive reaction in stock price to the removal of that
management. For instance, on the announcement of the death of Roy Farmer, the CEO of
Farmer Brothers, a seller of coffee products, Farmer Brothers’ stock price rose about 28%
(Hirsch, 2004). Generally, a loss of a company’s top executive raises concerns over
leadership, causing the stock to drop. However, in the case of Farmer Brothers, investors
thought a change in management would have a positive impact on the future of the
company. Take a look at this 4-minute video that summarizes the concept of agency
problems within an organization. It discusses how the goals of the agency can create conflict
with the owners using examples: KnowledgEquity. (2016, March 16). Agency theory [Video
file]. Retrieved from https://www.youtube.com/watch?v=hi93–8jnpk Reputation Matters
Finally, we evaluate the sixth principle: importance of reputation within an organization
and how it translates into the marketplace. Much of this principle has to do with the
company’s ability to perform and function using a high level of ethics. When investors
evaluate potential areas of investment, they consider not only the ability of a firm to make
4. profits, but also the ability of a firm to sustain those level of profits into the future. Much of
that success draws on how the firm is perceived based on its history of giving, strong moral
code, and relationship with the public and consumers. For instance, when the Enron and
WorldCom scandals were exposed, no one wanted to take responsibility for what happened,
and the public washed its hands of the firms in terms of support. These days, consumers
and investors look for firms and investments that are in demand based on how they are
perceived, such as the way Whole Foods supports and nurtures programs that incorporate
free trade programs with other countries or how Ben & Jerry’s gives back much of its profits
to grass roots organizations, such as the Vermont Community Action Team Grant Program.
This program focuses on those communities dealing with extreme poverty. Overall, these
Six Principles of Finance not only provide a framework within which finance is based, but
they incorporate all of the core areas of the field from conflict to profit on one end of the
spectrum to social responsibility and risk and reward on the other end. By understanding
these basic building blocks of finance, we can start to focus on the details of how each
principle impacts the financial environment. References Cain, B. (2005). Nike CEO, other
executives safely on ground after landing-gear scare. Retrieved from
http://www2.ljworld.com/news/2005/nov/22/nike_ceo_other_executives_safely_ground_a
fter_land/ Cheng, A. (2009). Ann Taylor posts fourth straight loss. Retrieved from
https://www.marketwatch.com/story/ann-taylor-swings-to-loss-on-slumping-sales-2009-
08-21-83400 Hirsch, J. (2004). Roy F. Farmer, 87: Built family coffee company. Retrieved
from http://articles.latimes.com/2004/mar/17/local/me-farmer17 Melicher, R. W., &
Norton, E. A. (2017). Introduction to finance: Markets, investments, and financial
management (16th ed.). Hoboken, NJ: John Wiley & Sons, Inc. Nexusby. (n.d.). ID 141216841
[Image]. Retrieved from https://www.dreamstime.com/diversificationdiversified-portfolio-
revenue-split-diversification-diversified-portfolio-revenue-split-image141216841 BBA
3301, Financial Management 4 Suggested Unit Resources UNIT x STUDY GUIDE Title In
order to access the following resources, click the links below. The article below relates
events from the past to concepts covered in this unit including risk and diversification.
Taking a few minutes to read it will help to make the connection between these concepts
and the real world. Habal, H. (2001). Play it safe in a risky financial environment. Dallas
Business Journal, 25(6), 24. Retrieved from
http://link.galegroup.com/apps/doc/A78903566/ITOF?u=oran95108&sid=ITOF&xid=5b8
d3631 The following video is a great overview of risk and reward. If you are interested in
learning more about this topic, take a few minutes to view this video. Khan Academy.
(2011). Risk and reward introduction [Video file]. Retrieved from
https://www.youtube.com/watch?v=mv5zucjq60k Learning Activities (Nongraded)
Nongraded Learning Activities are provided to aid students in their course of study. You do
not have to submit them. If you have questions, contact your instructor for further guidance
and information. How well do you know the unit material? Take the Unit I Knowledge Check
Quiz to find out! BBA 3301, Financial Management 5