Chapter 8- Introduction to Investment.pptxAilynSBulatao
INVESTMENT TOPIC AND ANYTHING RELATED TO BUSINESS Investment is the employment of funds with the aim of getting return on it.
In general terms, it means the use of money in the hope of making more money
In finance, it means the purchase of a financial product or other item of value with an expectation of favorable future returns.
Refers to concept of deferred consumption, which involves purchasing an asset, giving loan or keeping funds in a bank account with the aim of generating future returns
Commodities: include metals, oil, grain, and animal products, as well as financial instruments and currencies.
They can either be traded through commodity futures—which are agreements to buy or sell a specific quantity of a commodity at a specified price on a particular future date—or ETFs. Commodities can be used for hedging risk or for speculative purposes. Alternative investments is a catch-all category that includes hedge funds and private equity.
Hedge funds are so-called because they can hedge their investment bets by going long and short on stocks and other investments.
Private equity enables companies to raise capital without going public. Hedge funds and private equity were typically only available to affluent investors deemed "accredited investors" who met certain income and net worth requirements. The starting point in this process is to determine the characteristics of the various investments and then matching them with the individuals need and preferences.
These objectives may be tangible such as buying a car, house etc. and intangible objectives such as social status, security etc.
Long term high priority objectives:
Some investors look forward and invest on the basis of objectives of long term needs. They want to achieve financial independence in long period. For example, investing for post retirement period or education of a child etc. investors, usually prefer a diversified approach while selecting different types of investments.
Chapter 8- Introduction to Investment.pptxAilynSBulatao
INVESTMENT TOPIC AND ANYTHING RELATED TO BUSINESS Investment is the employment of funds with the aim of getting return on it.
In general terms, it means the use of money in the hope of making more money
In finance, it means the purchase of a financial product or other item of value with an expectation of favorable future returns.
Refers to concept of deferred consumption, which involves purchasing an asset, giving loan or keeping funds in a bank account with the aim of generating future returns
Commodities: include metals, oil, grain, and animal products, as well as financial instruments and currencies.
They can either be traded through commodity futures—which are agreements to buy or sell a specific quantity of a commodity at a specified price on a particular future date—or ETFs. Commodities can be used for hedging risk or for speculative purposes. Alternative investments is a catch-all category that includes hedge funds and private equity.
Hedge funds are so-called because they can hedge their investment bets by going long and short on stocks and other investments.
Private equity enables companies to raise capital without going public. Hedge funds and private equity were typically only available to affluent investors deemed "accredited investors" who met certain income and net worth requirements. The starting point in this process is to determine the characteristics of the various investments and then matching them with the individuals need and preferences.
These objectives may be tangible such as buying a car, house etc. and intangible objectives such as social status, security etc.
Long term high priority objectives:
Some investors look forward and invest on the basis of objectives of long term needs. They want to achieve financial independence in long period. For example, investing for post retirement period or education of a child etc. investors, usually prefer a diversified approach while selecting different types of investments.
Investment management is a generic term that most commonly refers to the buying and selling of investments within a portfolio. Investment management can also include banking and budgeting duties, as well as taxes. The term most often refers to portfolio management and the trading of securities to achieve a specific investment objective.
Investment management – also referred to as money management, portfolio management or private banking – covers the professional management of different securities and assets, such as bonds, shares, real estate and other securities. Proper investment management aims to meet particular investment goals for the benefit of the investors. These investors may be individual investors – referred to as private investors – who have built investment contracts with fund managers, or institutional investors who may be pension fund corporations, governments, educational establishments or insurance companies.
Investment management services provide asset allocation, financial statement analysis, stock selection, monitoring of existing investments and plan implementation.
Investment Accounts: Government Stocks and Unit TrustsZibusiso Masuku
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Summer intern Project "Study on Commodity Trading and Investments"chezhiang
The study and analysis that involves:
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•various trends in commodity trading investments.
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Investment management is a generic term that most commonly refers to the buying and selling of investments within a portfolio. Investment management can also include banking and budgeting duties, as well as taxes. The term most often refers to portfolio management and the trading of securities to achieve a specific investment objective.
Investment management – also referred to as money management, portfolio management or private banking – covers the professional management of different securities and assets, such as bonds, shares, real estate and other securities. Proper investment management aims to meet particular investment goals for the benefit of the investors. These investors may be individual investors – referred to as private investors – who have built investment contracts with fund managers, or institutional investors who may be pension fund corporations, governments, educational establishments or insurance companies.
Investment management services provide asset allocation, financial statement analysis, stock selection, monitoring of existing investments and plan implementation.
Investment Accounts: Government Stocks and Unit TrustsZibusiso Masuku
This is a short slide on Investment Accounts, mainly covering Government Stocks and Unit Trusts. Prepared by the Freshman students of Actuarial Science (2014/15) at NUST in Bulawayo Zimbabwe!
Summer intern Project "Study on Commodity Trading and Investments"chezhiang
The study and analysis that involves:
•concepts of commodities trading in india.
•various trends in commodity trading investments.
•role of commodities in indian financial markets.
•present situation of the commodities in indian market and suggest for any improvements thereafter.
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2024.06.01 Introducing a competency framework for languag learning materials ...Sandy Millin
http://sandymillin.wordpress.com/iateflwebinar2024
Published classroom materials form the basis of syllabuses, drive teacher professional development, and have a potentially huge influence on learners, teachers and education systems. All teachers also create their own materials, whether a few sentences on a blackboard, a highly-structured fully-realised online course, or anything in between. Despite this, the knowledge and skills needed to create effective language learning materials are rarely part of teacher training, and are mostly learnt by trial and error.
Knowledge and skills frameworks, generally called competency frameworks, for ELT teachers, trainers and managers have existed for a few years now. However, until I created one for my MA dissertation, there wasn’t one drawing together what we need to know and do to be able to effectively produce language learning materials.
This webinar will introduce you to my framework, highlighting the key competencies I identified from my research. It will also show how anybody involved in language teaching (any language, not just English!), teacher training, managing schools or developing language learning materials can benefit from using the framework.
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The Roman Empire, a vast and enduring power, stands as one of history's most remarkable civilizations, leaving an indelible imprint on the world. It emerged from the Roman Republic, transitioning into an imperial powerhouse under the leadership of Augustus Caesar in 27 BCE. This transformation marked the beginning of an era defined by unprecedented territorial expansion, architectural marvels, and profound cultural influence.
The empire's roots lie in the city of Rome, founded, according to legend, by Romulus in 753 BCE. Over centuries, Rome evolved from a small settlement to a formidable republic, characterized by a complex political system with elected officials and checks on power. However, internal strife, class conflicts, and military ambitions paved the way for the end of the Republic. Julius Caesar’s dictatorship and subsequent assassination in 44 BCE created a power vacuum, leading to a civil war. Octavian, later Augustus, emerged victorious, heralding the Roman Empire’s birth.
Under Augustus, the empire experienced the Pax Romana, a 200-year period of relative peace and stability. Augustus reformed the military, established efficient administrative systems, and initiated grand construction projects. The empire's borders expanded, encompassing territories from Britain to Egypt and from Spain to the Euphrates. Roman legions, renowned for their discipline and engineering prowess, secured and maintained these vast territories, building roads, fortifications, and cities that facilitated control and integration.
The Roman Empire’s society was hierarchical, with a rigid class system. At the top were the patricians, wealthy elites who held significant political power. Below them were the plebeians, free citizens with limited political influence, and the vast numbers of slaves who formed the backbone of the economy. The family unit was central, governed by the paterfamilias, the male head who held absolute authority.
Culturally, the Romans were eclectic, absorbing and adapting elements from the civilizations they encountered, particularly the Greeks. Roman art, literature, and philosophy reflected this synthesis, creating a rich cultural tapestry. Latin, the Roman language, became the lingua franca of the Western world, influencing numerous modern languages.
Roman architecture and engineering achievements were monumental. They perfected the arch, vault, and dome, constructing enduring structures like the Colosseum, Pantheon, and aqueducts. These engineering marvels not only showcased Roman ingenuity but also served practical purposes, from public entertainment to water supply.
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Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
The people of Punjab felt alienated from main stream due to denial of their just demands during a long democratic struggle since independence. As it happen all over the word, it led to militant struggle with great loss of lives of military, police and civilian personnel. Killing of Indira Gandhi and massacre of innocent Sikhs in Delhi and other India cities was also associated with this movement.
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This presentation provides a briefing on how to upload submissions and documents in Google Classroom. It was prepared as part of an orientation for new Sainik School in-service teacher trainees. As a training officer, my goal is to ensure that you are comfortable and proficient with this essential tool for managing assignments and fostering student engagement.
The French Revolution, which began in 1789, was a period of radical social and political upheaval in France. It marked the decline of absolute monarchies, the rise of secular and democratic republics, and the eventual rise of Napoleon Bonaparte. This revolutionary period is crucial in understanding the transition from feudalism to modernity in Europe.
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3. CONTENTS:
1.Meaning and Objective of/Investment
2.Investment Decision Process
3.Categories of Investment
4.Phases of Portfolio Management
4. Investment is the allocation of monetary resources to
assets that are expected to yield some returns over a period
of time. It involves the commitment of resources which
have been saved with the expectation that some benefits
will accrue in future.
In other words, Investment is a commitment of
interest,
value of
funds to derive the future income in the form of
dividend, rent, premium or appreciation in the
principal capital .
5. Definitions
•Generally, “investments” refers to financial assets and in particular
to marketable securities.
•Financial assets are paper or electronicclaimson some issuer, such
as the government or a company.
•Marketable securities financial assets that are easily and cheaply
tradable in organized markets
•
Real assets are tangible assets such asgold,silver, diamonds, real
estate.
6. Why to invest?
Investment increases future consumption
possibilities
◦ By foregoing consumption today and investing the
savings, investors expect to increase their future
consumption possibilities by increasing their
wealth
7. If we have savings and we do not invest, we
can’t earn anything on our savings.
Second, the purchasing power of cash
diminishes in inflation
This means that if savers do not invest their
savings, they will not only lose possible return
on their savings, but will also lose value of
their money due to inflation
If we do not invest, then?
8. But investment has problems
• Investment has the following three problems:
• A. Sacrifice
• While investing, investor delay their current
consumption (delaying consumption is kind of
sacrifice)
• B. Inflation - Investment loses value in periods of
inflation
• C. Risk - giving your money to someone else
involves risk
9. Compensation to investors
• Due to the three problems, investors will not
invest until they are compensated for these
problems
• Required rate of return = compensation for
(sacrifice , inflation, risk)
• RRR= opportunity cost + risk premium
10. Liquidity
Safety of principal
Tax benefits
Income stability
Purchasing power
Capital growth
11. Minimum comforts
Future return or income
Capital appreciation
Choice of investment
12. Non – Marketable FinancialAssets:-
- Bank Deposits (Savings account, Current account, Fixed
Deposits, Recurring Deposits etc.)
- Post office SavingsAccounts.
- Post office Time Deposits.
- Monthly Income Scheme of the Post Office.
- National Savings Certificate (NSC).
- Company Deposits.
- Employee Provident Fund Scheme.
- Public Provident Fund Scheme.
13. Money Market Instruments :-
- Treasury Bills
- Certificates of Deposits
- Commercial Paper
- Repos
Bonds or Debentures and Preference Shares
- Government Securities
- Savings Bonds
- Private Sector Debentures
- Public Sector Undertaking Bonds
- Preference Shares
15. It is considered as an involvement of funds of high risk
and more uncertain expectation of returns. It is basically a
short term phenomenon where people tend to buy assets
with the hope that a profit can be earned from a
subsequent price change. It is based on the expectation
that some change will occur.
The stock brokers may be cited as an
example. Some brokers buy shares with a view to make
quick profit by selling within few days, when the prices of
such shares shoot up.
16. BASIS SPECULATION INVESTMENT
Contract Type Ownership Creditor
Source of income Change in market price Earning of enterprise
Objective of purchase Tips, Hunches etc. Higher Return
Stability of income Uncertain Stable
Risk involved High Low
Duration Short Long
Acquisition On margin Outright purchase
Attitude Aggressive Conservative
17. BASIS INVESTOR SPECULATOR
Planning
Horizon
An investor has a relatively longer
planning horizon.
A speculator has a very short
planning horizon.
Time His holding period is usually at least
one year.
His holding period may be a few
days to a few months.
Risk disposition An investor is normally not willing to
assume more than moderate risk.
A speculator is ordinarily willingto
assume high risk.
Return
expectation
An investor usually seeks a moderate
rate of return.
A speculator looks for a high rateof
return.
Basis of
decisions
An investor attaches greater
significance to fundamental factors and
attempts a careful evaluation of the
prospects of the firm.
A speculator relies more on
technical charts and market
psychology.
Leverage An investor uses his own funds and
eschews borrowed funds.
A speculator normally resortsto
borrowings, which can be very
substantial, to supplement his
personal resources.
18. A gamble is a very short term investment in a game of
chance. Gambling involved high risk and the expectations
of high returns. It consists of uncertainty and high stackers
for thrill and excitement.
The example of gambling are horse racing, card
game, lottery etc.
19. Compared to investment and speculation, the result of
gambling is known more quickly.
Rational people gamble for fun, not for income.
Gambling does not involve a bet on an economic activity.
It is based on risk that is created artificially.
20. Arbitrage is a planned methods of putting the savings
safely into different investments to get a better return. An
investor can also be an arbitrageur if he buys and sells
securities in more than one stock exchange to take
advantage of the price differentials in such exchanges.
Derivative market is an example ofArbitrage transactions.
22. Objective fulfillment
An investment should fulfil the objective of the savers. Every
individual has a definite objective in making an investment. When the
investment objective is contrasted with the uncertainty involved with
investments, the fulfilment of the objectives through the chosen
investment avenue could become complex.
23. Safety
• The first and foremost concern of any ordinary investor is that
his investment should be safe.
• That is he should get back the principal at the end of the
maturity period of the investment.
• There is no absolute safety in any investment, except
probably with investment in government securities or such
instruments where the repayment of interest and principal is
guaranteed by the government.
24. Return
The return from any investment is expectedly consistent with the extent of risk
assumed by the investor. Risk and return go together. Higher the risk, higher the
chances of getting higher return. An investment in a low risk - high safety
investment such as investment in government securities will obviously get the
investor only low returns.
Liquidity
Given a choice, investors would prefer a liquid investment than a higher return
investment. Because the investment climate and market conditions may change
or investor may be confronted by an urgent unforeseen commitment for which he
might need funds, and if he can dispose of his investment without suffering unduly
in terms of loss of returns, he would prefer the liquid investment.
25. Hedge against inflation
The purchasing power of money deteriorates heavily in a country which is not
efficient or not well endowed, in relation to another country. Investors who save for
the long term, look for hedge against inflation so that their investments are not
unduly eroded; rather they look for a capital gain which neutralises the erosion in
purchasing power and still gives a return.
26. Tax shield
Investment decisions are highly influenced by the tax system in the
country. Investors look or front-end tax incentives while making an
investment and also rear-end tax reliefs while reaping the benefit of their
investments.
28. 1.Growth investments
These are more suitable for long term investors that are willing and able to withstand market ups and
downs.
Shares
Shares are considered a growth investment as they can help grow the value of your original
investment over the medium to long term.
If you own shares, you may also receive income from dividends, which are effectively a
portion of a company’s profit paid out to its shareholders.
Of course, the value of shares may also fall below the price you pay for them. Prices can be
volatile from day to day and shares are generally best suited to long term investors, who are
comfortable withstanding these ups and downs.
Also known as equities, shares have historically delivered higher returns than other assets,
shares are considered one of the riskiest types of investment.
29. Property
Property is also considered as a growth investment because the price of houses
and other properties can rise substantially over a medium to long term period.
However, just like shares, property can also fall in value and carries the risk of
losses.
It is possible to invest directly by buying a property but also indirectly, through a
property investment fund.
30. 2.Defensive investments
These are more focused on consistently generating income, rather than growth, and are
considered lower risk than growth investments.
Cash
Cash investments include everyday bank accounts, high interest savings accounts and term
deposits. They typically carry the lowest potential returns of all the investment types.
While they offer no chance of capital growth, they can deliver regular income and can play an
important role in protecting wealth and reducing risk in an investment portfolio.
31. Fixed interest
The best known type of fixed interest investments are bonds, which are
essentially when governments or companies borrow money from
investors and pay them a rate of interest in return.
Bonds are also considered as a defensive investment, because they
generally offer lower potential returns and lower levels of risk than
shares or property.
They can also be sold relatively quickly, like cash, although it’s important
to note that they are not without the risk of capital losses.
32. Understanding the investment
decision process
• The basis of all investment decisions is to earn
return and assume risk
• By investing, investors expect to earn a return
(expected return)
33. • Fundamental Approach: Believed that there is
an intrinsic value of a security that can be
company, industry and economy.
• Psychological Approach: This approach based
on the premises that stock prices are guided
by the emotions. It is more important to
analyse that how investor tend to behave as
the market is swept by the waves of optimism
and pessimism.
Different approaches to investment
decision making
34. • Academic Approach: Suggest that:
-Stock market is efficient in reacting quickly
and rationally hence it reflects intrinsic value
fairly well.
-Stock price behavior correspond to the
random walk, hence past price behavior can
not be used to predict the future price.
- There is positive relationship between risk
and return.
Different approaches to investment
decision making
35. • Electric Approach: This approach draws on all
the three approaches.
-Fundamental analysis is helpful in
establishing basic standard benchmarks.
- Technical analysis is useful in broadly
gauging the mood of the investor.
- there is a strong correlation between risk
and return.
Different approaches to investment
decision making
37. There are 5 investment process steps that help you in selecting
and investing in the best asset class according to your needs and
preferences.
Step 1- Understanding the need
The first and the foremost step of investment process is to
understand the client or the investor his/her needs, his risk taking
capacity and his tax status. After getting an insight of the goals and
restraints , it is important to set a benchmark for the one’s portfolio
management process which will help in evaluating the
performance and check whether the objectives are achieved or
not.
38. Step 2- Asset allocation decision
This step involves decision on how to allocate the
investment across different asset classes, i.e. fixed income
securities, equity, real estate etc. It also involves decision of
whether to invest in domestic assets or in foreign assets.
The investor will make this decision after considering the
macroeconomic conditions and overall market status.
39. Step 3- Portfolio strategy selection
Third step in the investment process is to select
the proper strategy of portfolio creation. Choosing
the right strategy for portfolio creation is very
important as it forms the basis of selecting the
assets that will be added in the portfolio
management process. The strategy that conforms
to the investment policies and investment
objectives should be selected.
40. There are two types of portfolio strategy-
1.Active Management
2.Passive Management
Active portfolio management process refers to a strategy
where the objective of investing is to outperform the market
return compared to a specific benchmark by either buying
securities that are undervalued or by short selling securities
that are overvalued. In this strategy, risk and return both are
high. This strategy is a proactive strategy it requires close
attention by the investor or the fund manager.
Passive portfolio management process refers to the strategy
where the purpose is to generate returns equal to that of the
market. It is a reactive strategy as the fund manager or the
investor reacts after the market has responded.
41. Step 4- Asset selection decision
The investor needs to select the assets to be placed in the
portfolio management process in the fourth step. Within each
asset class, there are different sub asset-classes. For example,
in equity, which stocks should be chosen? Within the fixed
income securities class, which bonds should be chosen?
Also, the investment objectives should conform to the
investment policies because otherwise the main purpose of
investment management process would become meaningless.
42. Step 5- Evaluating portfolio performance
This is the final step in the investment process
which evaluates
performance. This
the portfolio management
is an important step as it
measures the performance of the investment with
benchmark, in both absolute and
respect to a
relative terms. The investor would determine
whether his objectives are being achieved or not.
43. After all the above
investor needs to
points have been followed, the
keep monitoring the portfolio
management performance at an appropriate interval. If
the investor finds that any asset is not performing well,
he/she should ‘re balance’ the portfolio. Re balancing
means adding or removing (or better call it adjusting)
some assets from the portfolio to maintain the target
level. Re balancing helps the investor to maintain his/her
level of risk and return.
45. Phases of Portfolio Management
Portfolio Management comprises of many activities that are targeted at optimizing the investment of
client’s funds. There are basically five phases in the portfolio management and each of these phases
makes up an integral part of the Portfolio Management and the success of it depends on the
effectiveness in implementing these phases.
Security Analysis:
There are many types of securities available in the market including equity shares, preference shares,
debentures and bonds. Apart from it, there are many new securities that are issued by companies such
as Convertible debentures, Deep Discount bonds, floating rate bonds, flexi bonds, zero coupon bonds,
global depository receipts, etc.
It forms the initial phase of the portfolio management process and involves the evaluation and analysis
of risk return features of individual securities. The basic approach for investing in securities is to sell
the overpriced securities and purchase underpriced securities. The security analysis comprises of
Fundamental Analysis and technical Analysis.
46. Portfolio Analysis:
A portfolio refers to a group of securities that are kept together as an investment.
Investors make investment in various securities to diversify the investment to make it
risk averse. A large number of portfolios can be created by using the securities from
desired set of securities obtained from initial phase of security analysis.
By selecting the different sets of securities and varying the amount of investments in
each security, various portfolios are designed. After identifying the range of possible
portfolios, the risk-return characteristics are measured and expressed quantitatively.
It involves the mathematically calculation of return and risk of each portfolio.
Portfolio Selection
During this phase, portfolio is selected on the basis of input from previous phase
Portfolio Analysis. The main target of the portfolio selection is to build a portfolio that
offer highest returns at a given risk. The portfolios that yield good returns at a level of
risk are called as efficient portfolios. The set of efficient portfolios is formed and from
this set of efficient portfolios, the optimal portfolio is chosen for investment.
The optimal portfolio is determined in an objective and disciplined way by using the
analytical tools and conceptual framework provided by Markowitz’s portfolio theory.
47. Portfolio Revision
• After selecting the optimal portfolio, investor is required to monitor it constantly to ensure that the portfolio
remains optimal with passage of time. Due to dynamic changes in the economy and financial markets, the
attractive securities may cease to provide profitable returns. These market changes result in new securities that
promises high returns at low risks.
• In such conditions, investor needs to do portfolio revision by buying new securities and selling the existing
securities. As a result of portfolio revision, the mix and proportion of securities in the portfolio changes.
• Portfolio Evaluation
• This phase involves the regular analysis and assessment of portfolio performances in terms of risk and returns over
a period of time. During this phase, the returns are measured quantitatively along with risk born over a period of
time by a portfolio. The performance of the portfolio is compared with the objective norms. Moreover, this
procedure assists in identifying the weaknesses in the investment processes.
•