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Introduction To Investments

The document discusses key aspects of financial markets and investment. It defines investment and differentiates between investment and speculation. It covers primary and secondary markets, functions of financial markets, and classifications such as debt, equity, money and commodity markets. The document also discusses attributes of investment like return, risk, marketability and tax benefits. It provides examples of different types of investments and outlines the investment process.

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161 views

Introduction To Investments

The document discusses key aspects of financial markets and investment. It defines investment and differentiates between investment and speculation. It covers primary and secondary markets, functions of financial markets, and classifications such as debt, equity, money and commodity markets. The document also discusses attributes of investment like return, risk, marketability and tax benefits. It provides examples of different types of investments and outlines the investment process.

Uploaded by

asifanis
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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i     

˜ Financial Markets Functions and classification.


˜ Definition and concept of investment.
˜ Types of investment.
˜ Attributes of investment.
˜ Investment and speculation.
 


 

˜ Orimary Markets: Markets where new securities


are issued.
˜ Secondary Markets: Markets where outstanding
securities are traded.



    


 

Functions:
a) Facilitate price discovery.
b) Orovide liquidity.
c) Reduce the cost of transaction.
Classification:
Debt Market Equity Market
Money Market Capital Market
Orimary Market Secondary Market
Cash/Spot Market Forward /Futures Market
Exch Traded Mkt OTC Market
a      

Investment is a sacrifice of current money or


other resources for future benefits. Related
to saving or deferred consumption.
    
£on Marketing FA Equity Shares
Bonds Money Market
Mutual Funds Life Insurance
Real Estate Orecious objects
     

˜ Rate of return:equal to Ann. Inc.+ (End price-Beg. Orice) /Beg. Orice


˜ Risk: Tools to calculate risk are variance( square of deviation of
individual returns from avg returns), deviation, beta ( measure of
volatility of inv. In response to market swings)
˜ Marketability-a) it can be transacted quickly. b) the transaction cost
is low. c) price variation is negligible between two successive txns.
˜ Tax shelter: Initial tax benefits, continual tax benefits, terminal tax
benefits.
˜ Convenience: a) whether inv can be made readily. b) can inv be
looked after easily.
a         | 
 

Investment Speculation

Olanning Horizon Longer Shorter

Risk disposition Moderate risk High risk

Return expectation Moderate High

Basis of decisions Fundamental factors & Relies more on


careful evaluation of hearsay and market
prospects of the psy. believe in pools,
company. churning, runs,
ramping, bear raid.
Leverage Uses his own funds Borrows heavily.
 

  

˜ Specification of Investment Objectives and


constraints.
˜ Choice of Asset Mix
˜ Formulation of Oortfolio Strategy
˜ Selection of Securities
˜ Oortfolio Execution
˜ Oortfolio Revision
˜ Oerformance Evaluation.

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