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Introduction to Investments
Investment: Sacrifice in value today in
anticipation of higher future value
Investment in real assets vs financial assets
Three broad areas covered in the course:
- Investment concepts
risk, definition & measurement, management
pricing of securities
predictability of future prices
-Investment analysis
debt securities, equity securities, derivatives
-Investment strategy
Portfolio management issues
Types of investors:
-Individual investors
-Institutional Investors
-Pension Funds
-Mutual Funds
Types of securities markets:
-Primary Market
-Secondary Market
-Spot Market
-Futures Markets
-Money Markets
-Capital Markets
Why Save?
-Consumption Smoothing
-Speculative Opportunities
Why do securities markets exist?
-Wealth of society is increased
-Consumption & investment flexibility
is increased
Primary market benefits; secondary market
The Nature of Investment decisions:
-Speculative strategies: to what extent?
Timing and selection
-Asset allocation
-Security selection
Why be passive?
-costs of active investment
-less diversification
-active investments may not work
Why be active?
-tax management issues
-nature of the investment