This document discusses different types of investments and financial instruments. It defines investment as purchasing an asset with the goal of generating future income or appreciation. Examples given include factories, education, and monetary assets. Speculation aims to profit from short-term price fluctuations rather than long-term growth. The document contrasts features of investments versus speculation. It also outlines the investment process, different types of financial instruments including money market instruments, treasury bills, certificates of deposit, commercial paper, repos, and call money markets.

1. INVESTMENT MANAGEMENT

2. WHAT IS INVESTMENT
• An asset or item that is purchased with the hope that
it will generate income or appreciate in the future.
• In an economic sense, an investment is the purchase
of goods that are not consumed today but are used
in the future to create wealth.

3. • The building of a factory used to produce
goods and the investment one makes by going
to college or university are both examples of
investments in the economic sense.

4. • Investment is the sacrifice of certain present value
for the uncertain future reward.
• In finance an investment is a monetary asset
purchased with the idea that the asset will provide
income in the future or appreciate and be sold at a
higher price.

5. • Speculation is the practice of engaging in risky
financial transactions in an attempt to profit from
short or medium term fluctuations in the market
value of a tradable good such as a financial
instrument, rather than attempting to profit from the
underlying financial attributes embodied in the
instrument such as capital gains, interest, or
dividends.

6. Differences
Investment
• Comparatively long term
• Earnings of enterprise
• Small quantity
• Very stable income
• Investor is cautious and
conservative
• Scientific analysis of
intrinsic worth
• Ownership
• Outright purchase
Speculation
• Short time only
• Changes in market price
• Large
• Uncertain and erratic
• Daring and careless
• Hunches, tips, etc
• Not ownership
• Purchase on margin

7. Features of good investment
• Safety of principal
• Adequate liquidity and collateral value
• Stability of income
• Capital growth
• Tax benefits
• Purchasing power stability
• conceal ability

8. Investment process
• Investment policy
– Investible funds
– Objective
– Knowledge
 Analysis
 Market
 Industry
 Company

9. • Valuation
Intrinsic value
Future value
– Portfolio construction
diversification
selection and allocation
Portfolio Evaluation
Appraisal
Revision

10. Financial Instruments
• A real or virtual document representing a legal
agreement involving some sort of monetary
value.
• In today's financial marketplace, financial
instruments can be classified generally as
equity based, representing ownership of the
asset, or debt based, representing a loan
made by an investor to the owner of the asset.

11. Money Market Instruments
• Very short term Debt securities market
• Highly markatable
• Fixed income market
• Trade in large denominations
• Out of reach of individual investors

12. Treasury Bills
• Government raises money by selling bills to
the public.
• Investors buy the bills at a discount
• Face value is the maturity value
• Initial maturities were 91 days or 364 days
now 182 days also available in India.
• One month, Three months and six months in
US.
• Banks, Primary dealers, provident fund and
other investors can purchase

13. Specimen of UK TB

14. Certificate of Deposit
• It is time deposit with the bank
• CD’s are issued at discount
• Issued in denominations of Rs 100000
maturity value.
• These can be sold to another investor
• 14 days to one year
• For financial institutions its one year
• No advance can be taken and no limit

15. Specimen

16. Commercial paper
• These are debt instruments
• Highly rated companies in India can issue
• Now financial institutions can also raise short
term fund.
• 15 days to one year
• Multiple of 500000
• Issued at discount
• Banks are the major players in the primary
market.

17. REPOS (Repurchase Agreements)
• One party sells a security to another party
with an agreement to buy it back at a
specified time and price.
• Minimum period was 3 days now it is one day
• These are active between commercial banks.
• The difference between the sale and the buy
back price ids the interest cost

18. Bills rediscounting
• Bills discounting
• Rediscounting.

19. Call money markets
• Market for short term funds with maturity
period ranging between one day and 14 days.

20. Other
• Term money: Institutional borrowing
• Bank deposits
• Banker Acceptances
• Commercial bills.