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Investment analysis portfolio management scribd investment companies in denver

Investment analysis portfolio management scribd

They rise for some time and after each rise, they fall. However, the falls are of a lower magnitude then earlier. As a result, prices reach higher levels with each rise. Once the prices have risen very high, the bear phase in bound to start i. Graph 2 shows the typical behavior of prices on the stock exchange in the case of a. Bear phase. It would be seen that prices are not falling consistently and, after each fall, there is a rise in prices.

However, the rise is not much as to take the prices higher than the previous peak. It means that each peak and trough is now lower than the previous peak and trough. The theory argues that primary movements indicate basic trends in the market.

It states that if cyclical swings of stock market prices indices are successively higher, the market trend is up and there is a bull market. On the contrary, if successive highs and low are successively lower, the market is on a downward trend and we are in bear market. Similarly, even where the primary trend is downward, there is upward movement of prices also. These movements are known as secondary movements and are shorter in duration and are opposite in direction to the primary movements.

These fluctuations are without any definite trend. Thus is the daily share market price index for a few months are plotted on the graph it will show both upward and downward fluctuations. These fluctuations are the result of speculative factor. An investment manger really is not interested in the short run fluctuations in share prices since he is not a speculator. It may be reiterated that anyone who tries to gain from short run fluctuations in the stock market, can make money only be sheer chance.

The investment manager should scrupulously keep away from the daily fluctuations of the market. He is not a speculator and should always resist the temptation of speculating. Such a temptation is always very attractive but must always be resisted. Speculation is beyond the scope of the job of an investment manager. Ideally speaking the investment manage would like to purchase shares at a time when they have reached the lowest trough and sell them at a time when they reach the highest peak.

However, in practice, this seldom happens. Even the most astute investment manager can never know when the highest peak or the lowest through have been reached. Therefore, he has to time his decision in such a manner that he buys the shares when they are on the rise and sells then when they are. It means that he should be able to identify exactly when the falling or the rising trend has begun. This is technically known as identification of the turn in the share market prices.

Identification of this turn is difficult in practice because of the fact that, even in a rising market, prices keep on falling as a part of the secondary movement. Similarly even in a falling market prices keep on rising temporarily. How to be certain that the rise in prices or fall in the same in due to a real turn in prices from a bullish to a bearish phase or vice versa or that it is due only to short run speculative trends? Dow Jones Theory identifies the turn in the market prices by seeing whether the successive peaks and troughs are higher or lower than earlier.

The first specification of efficient markets and their relationship to the randomness of prices for things traded in the market goes to Samuelson and Mandelbrot. According to the Random Walk Theory, the changes in prices of stock show independent behavior and are dependent on the new pieces of information that are received but within themselves are independent of each other.

Whenever a new price of information is received in the stock market, the market independently receives this information and it is independent and separate from all the other prices of information. For example, a stock is selling at Rs.

Afterwards, the news of a strike in that company will bring down the stock price to Rs. The stock price further goes down to Rs. Thus, the first fall in stock price from Rs. But the second fall in the price of a stock from Rs. Therefore, each price change is independent of the. However, independent pieces of information, when they come together immediately after each other show that the price is falling but each price fall is independent of the other price fall.

The basic essential fact of the Random Walk Theory is that the information on stock prices is immediately and fully spread over that other investors have full knowledge of the information. The response makes the movement of prices independent of each other. Thus, it may be said that the prices have an independent nature and therefore, the price of each day is different.

The theory further states that the financial markets are so competitive that there is immediate price adjustment. It is due to the effective communication system through which information can be disturbed almost anywhere in the country. This speed of information determines the efficiency of the market. It is used to estimate the expected return of any portfolio with the following formula:. It believes in the maximization of return through a combination of securities.

The theory states that by combining securities of low risks with securities of high risks success can be achieved in making a choice of investments. There can be various combinations of securities. The modern theory points out that the risk of portfolio can be reduced by diversification.

Harry Markowitz and William Sharpe have developed this theory. According to him, the portfolio manager has to make probabilistic estimates of the future performances of the securities and analyse these estimates to determine an efficient set of portfolios. Then the optimum set of portfolio can be selected in order to suit the needs of the investors.

The following are the assumptions of Markowitz Theory:. He has made the estimates of the expected return and variance of indexes which are related to economic activity. Individual securities return is determined solely by random factors and on its relationship to this underlying factor with the following formula:.

Is a person who is in the wake of a contract agreement with a client, advices or directs or undertakes on behalf of the clients, the management or distribution or management of the funds of the client as the case may be. Means a manager who exercise under a contract relating to a portfolio management exercise any degree of discretion as to the investment or management of portfolio or securities or funds of clients as the case may be.

The relationship between an investor and portfolio manager is of a highly interactive nature. The portfolio manager carries out all the transactions pertaining to the investor under the power of attorney during the last two decades, and increasing complexity was witnessed in the capital market and its trading procedures in this context a key uninformed investor formed investor found himself in a tricky situation , to keep track of market movement ,update his knowledge, yet stay in the capital market and make money , therefore in looked forward to resuming help from portfolio manager to do the job for him.

The generally rule in that greater risk more of the profits but S. Portfolio management is not a substitute to the inherent risks associated with equity investment. Only those who are registered and pay the required license fee are eligible to operate as portfolio managers. An applicant for this purpose should have necessary infrastructure with professionally qualified persons and with a minimum of two persons with experience in this business and a minimum net worth of Rs.

The certificate once granted is valid for three years. Fees payable for registration are Rs 2. From the fourth year onwards, renewal fees per annum are Rs These are subjected to change by the S. The S. The portfolio manager should have a high standard of integrity, honesty and should not have been convicted of any economic offence or moral turpitude.

He should not resort to rigging up of prices, insider trading or creating false markets, etc. The observance of the code of conduct and guidelines given by the S. The manager has to submit periodical returns and documents as may be required by the SEBI from time-to- time. A portfolio manager in the Indian context has been Brokers Big brokers who on the basis of their experience, market trends, Insider trader, helps the limited knowledge persons.

According to S. With the development of Indian Securities market and with appreciation in market price of equity share of profit making companies, investment in the securities of such companies has become quite attractive. At the same time, the stock market becoming volatile on account of various facts, a layman is puzzled as to how to make his investments without losing the same. He has felt the need of an expert guidance in this respect.

Similarly non resident Indians are eager to make their investments in Indian companies. In such a case, his records and his report to his clients should clearly indicate that such securities are held by him on behalf of his client. Fails to comply with any conditions subject to which certificate of registration has been granted. Suspension of registration for a specific period. Cancellation of registration. The word investment means many things to many persons.

Investment in financial assets leads to further production and income. It is lending of funds for income and commitment of money for creation of assets, producing further income. Investment also means purchasing of securities, financial instruments or claims on future income. Investment is made out of income and savings credit or borrowings and out of wealth. It is a reward for waiting for money. The capital stock of society is the goods which are used in the production of other goods.

Thus, an investment, in economic terms, means an increase in building, equipment, and inventory. It is a general or extended sense of the term. It means an exchange of financial claims such as shares and bonds, real estate, etc. The economic and financial concepts of investment are related to each other because investment is a part of the savings of individuals which flow into the capital market either directly or through institutions.

Thus, investment decisions and financial decisions interact with each other. Financial decisions are primarily concerned with the sources of money where as investment decisions are traditionally concerned with uses or budgeting of money. Financial market provides facilities for buying and selling of financial claims and services. Thus, securities are the financial instruments which are bought and sold in the financial market for investment.

The important financial instruments are shares, debentures, bonds, etc. These securities are used by the investors for their investment. Some of these securities are transferable while some of them are not transferable. The alternative investment avenues for the investor are to be considered first so as to satisfy the above objectives of investors. The following categories of investors are open to investors as avenues for savings to flow in financial form:.

Deposits, National Savings Certificates and other Postal Savings Schemes: Many people in villages and some urban areas are investors in these schemes due to lower risk of loss of money and greater security of funds. They also have the advantage of diversified Portfolio involving the reduction of risk and economies of scale reducing the cost of investment.

Incidentally the instruments in which investment can be made in the new issues market are: 1. Equity issues through prospectus or rights announced by existing shareholders. Preference shares with a fixed dividend either convertible into equity or not. Debentures of various categories — convertible, fully convertible, partly convertible and non- convertible debentures. Bonds — taxable or free-taxed with interest rates.

Relief bonds, bonds of port trusts, treasury bills, etc. The maturity period is varying generally upto10 to20 years. Gilt-edged securities market constitutes the largest segment of the Indian capital market. These are fully secured as they have government backing. Tax benefits are available to these securities.

They may go for convertible debentures, if they want to have both fixed income and likely capital appreciation in future. If they are risk taking and aim only at capital gains, then they may invest in equity shares. Of the new issues those of well established existing companies are least risky while those of new companies floated by little known new entrepreneurs are most risky.

In choosing the new issues for investment decision, the investor has to read a copy of the prospectus and note the following:. Products manufactured and demand for those products at home or abroad — the competitors and the share of each in the market.

Prospects through projected earnings, net profits and dividend paying capacity, waiting period involved, etc. If the new issues belong to a company promoted by well — known Business Groups like Tatas, Birlas etc. The company should belong to an industry which is expanding and has good potential like drugs, chemicals, Telecom etc.

But the returns may also be high commensurate with risk. A host of imponderable factors operate in the stock market and a genuine investor has to do the following things:. Study the Balance Sheet of the company and analyze the prospects of sales and profits.

Study whether the management is professional and good, whether other accounting practices are dependable and consistent. The company becomes attractive to buy if the financial ratios support the view that the fundamentals are strong and the shares are worth buying. The same is worth selling if in his judgement it is overhauled.

For assessing the under valuation and over valuation, the analyst and his analytical power count for this purpose. Never buy on rumours or market gossip. Buy only on the basis of fundamental analysis of the companies based on balance sheet data analysis. Buy a diversified list of companies and not put all the money in one or two companies. All investments in the stock market are risky.

The risk can be reduced by proper diversification of the portfolio into 10 or 15 companies. Study the sales, gross profit, net profit in relation to equity capital employed and attempt a forecast for the coming half year or one year. The investor should also watch for low priced shares which are about to turn around for more profitability in future.

Investors should buy on declines and follow the principle of contrariness. Avoid both fear and greed on the stock market. If investor is not afraid of the market, he generally studies the market and buys at lows and sells at highs. The investor should know how to analyze the security prices of companies and pick up the undervalued shares. The valuation may be based on the net profits discounted to the present by a proper discount rate or by the book value of share, estimated on the basis of net worth of the company.

Timing of purchase and sale is also very important. He should see whether there is a bull market or bear market in a share by a study of the share price over a period of 15 to 30 days. In a bull phase one can sell at one of the peaks and in a bear phase one can buy at one of troughs.

If the investor is greedy to wait on to see the maximum peak, and then he may be disappointed if the price shows a down trend. Similarly, it is difficult to foresee the lowest price for a scrip for the buy. The investor has to use his discretion. A long — term investor gains more than speculator. That means if capital base is Rs. Once the investment is made after a study of fundamentals, a temporary fall in its price should not cause worry.

What the investor needs is patience, which is possible if he is a long — term investor. Active strategy is based on the assumption that it is possible to beat the market. This is done by selecting assets that are viewed as under priced or by changing the asset mix or proportion of fixed income securities and shares. Active strategy is carried out as follows:. The risk is high and the composition of portfolio is flexible.

Success of active strategy depends on correct decisions as regard the timing of movement in the market as a whole, weight age of various securities in the portfolio and individual share selection. The passive strategy does not aim at outperforming the market. Unlike the active strategy. On the other hand the stocks could be randomly selected on the assumption of a perfectly efficient market.

The objective is to include in the portfolio a large number of securities so as to reduce risks specific to individual securities. The characteristics of positive strategy are:. The strategy can be implemented by investing in securities so as to duplicate the portfolio of a market index which is called indexing.

The investor sacrifices some money today in anticipation of a financial return in future. He indulges in a bit of speculation. There is an element of speculation involved in all investment decisions. However it does not mean that all investments are speculative by nature. Genuine investments are carefully thought out decisions. On the other hand, speculative investments are not carefully thought out decisions.

They are based on tips and rumours. An investment can be distinguished from speculation in three ways — Risk, capital gain and time period. Investment involves limited risk while speculation is considered as an investment of funds with high risk. The purchase of a security for earning a stable return over a period of time is an investment whereas the primary motive is to earn high profits through price changes is termed as speculation. Thus, speculation involves buying a security at low price and selling at a high price to make a capital gain.

The truth is that any investment is a speculation if the investor uses his judgement and forecast the probable course of events in order to reap the returns on his investment. The return on investment is the reward to the investors. The return includes both current income and capital gains or losses, which arises by the increase or decrease of the security price.

In case of every investment, there is a chance of loss. It may be loss of interest, dividend or principal amount of investment. However, risk and return are inseparable. Return is a precise statistical term and it is measurable. But the risk is not precise statistical term. However, the risk can be quantified: The investment process should be considered in terms of both risk and return. It offers several different courses of action. As time moves on, analysts believe that conditions may change and investors may revaluate expected return and risk for each investment.

In the past few years, the investment manager has begun looking into the state of labor management relations in the company under consideration and the area where it is located. Once a portfolio is selected the next step is the selection of the specific assets to be included in the portfolio.

Assets in this respect means group of security or type of investment. While selecting the assets the portfolio manager has to make asset allocation. It is the process of dividing the funds among different asset class portfolios. The different asset class definitions are widely debated, but four common divisions are stocks, bonds, real-estate and commodities.

The exercise of allocating funds among these assets and among individual securities within each asset class is what investment management firms are paid for. Asset classes exhibit different market dynamics, and different interaction effects; thus, the allocation of monies among asset classes will have a significant effect on the performance of the fund. Some research suggests that allocation among asset classes has more predictive power than the choice of individual holdings in determining portfolio return.

Arguably, the skill of a. In order to achieve long term success, individual investors should concentrate on the allocation of their money among stocks, bonds and cash. It means how much to invest in stocks? How much to invest in bonds? And how much to keep in cash reserves? Thus, the asset allocation decision is the most important determinant of investment performance. The basic long term objective of any investor should be to maximize his real overall return on initial investment after investment.

To achieve this objective, the investor should look where the best bargains lie. Asset allocation means different things to different people. The portfolio manager has to complete the following stages before making asset allocation. The following are the different asset classes:. Portfolio management is handling the fund on behalf of the company or institution in order to determine the suitable combination of different assets so that the total risk can be reduced to the minimum while the return can be achieved to the maximum extent.

This is a tricky job which needs efficiency of high caliber. Therefore, the portfolio manager has to keep in mind the following factors while making asset allocation and design an efficient portfolio. A portfolio is a collection of securities. It is essential that every security be viewed in a portfolio context. It is logical that the expected return of a portfolio should depend on the expected return of each of the security contained in it. Moreover, the amounts invested in each security should also be important.

There are two approaches to the selection of equity portfolio. One is technical analysis and the other is fundamental analysis. Technical analysis assumes that the price of a stock depends on supply and demand in the capital market. All financial and market information of given security is already reflected in the market price.

Charts are drawn to identify price movements of a given security over a period of time. These charts enable us to predict the future movement of the security. The fundamental analysis includes the study of ratio analysis, past and present track record of the company, quality of management, government policies etc… an efficient portfolio manager can obviously give more weight to fundamental analysis than technical analysis. To reduce risk of a portfolio investors resort to diversification.

Diversification means shifting form one security to another security. The maximum benefits of risk reduction can be achieved by just having of 10 to 15 carefully selected securities. Portfolio risk can be divided into two groups- diversible risk and non-diversible risk. Hence, such risk can be diversified by including stocks of other companies in the portfolio. Non-diversible risk arises from the influence of economy wide factors which affect returns of all companies; investors cannot avoid the risk arising from them.

Often investors tend to buy or sell securities on casual tips, prevailing mood in the market, sudden impulse, or to follow others. An investor should investigate the following factors about the stock to be included in his portfolio:. We can observe from the above diagram that the strategy of an investor should be at A, B or C respectively, depending upon his preferences and income requirements. If he takes some risk at B or C, the risk can be reduced if it is concerned with a specific company risk, but the market risk is outside his control.

The risk can be reduced by a proper diversification of scripts in the portfolio. There may be a combination of A, B and C positions in his portfolio so that he can have a diversified risk-return pattern. This diversification can help to minimize risk and maximum the returns.

From the above discussion it is clear that portfolio functioning is based on market risk, so one can get the help from the professional portfolio manager or the Merchant banker if required before investment because applicability of practical knowledge through technical analysis can help an investor to reduce risk. In other words Security prices are determined by money manager and home managers, students and strikers, doctors and dog catchers, lawyers and landscapers, the wealthy and the wanting.

This breadth of market participants guarantees an element of unpredictability and excitement. If we were all totally logical and could separate our emotions from our investment decisions then, the determination of price based on future earnings would work magnificently.

And since we would all have the same completely logical expectations, price would only change when quarterly reports or relevant news was released. Yet many investors buy securities without attempting to control the odds. Portfolio managers can provide the professional advice to the investors to make an intelligent and informed investment. Portfolio management role is still not identified in the recent time but due it expansion of investors market and growing complexities of the investors the services of the portfolio managers will be in great demand in the near future.

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Library Staff: For giving valuable information about the various books related to this project. Family and Friends: For their constant support and encouragement. Effective investment planning for the investment in securities by considering the following factors- a Fiscal, financial and monetary policies of the Govt. For this purpose they have to carry the following analysis: a To assess the quality of the management of the companies in which investment has been made or proposed to be made.

At its most mature, IT Portfolio management is accomplished through the creation of two portfolios: i Application Portfolio - Management of this portfolio focuses on comparing spending on established systems based upon their relative value to the organization. The decision what to buy has to be seen in the context of the following:- a There is a wide variety of investments available in market i. They are: a Statistical Analysis of Past Performance: A statistical analysis of the immediate past performance of the share price indices of various industries and changes there in related to the general price index of shares of all industries should be made.

Stock market operation can be analyzed by: a Fundamental approach: - Based on intrinsic value of shares. Prices are based upon demand and supply of the market. Following are the some of the types of Risk: 1 Interest Rate Risk: This arises due to the variability in the interest rates from time to time. Long Term Bonds More vulnerable to interest rate risk. Investment in shares of companies has its own risk or uncertainty; these risks arise out of variability of yields and uncertainty of appreciation or depreciation of share prices, losses of liquidity etc The risk over time can be represented by the variance of the returns while the return over time is capital appreciation plus payout, divided by the purchase price of the share.

Experience has shown that beyond the certain securities by adding more securities expensive. The Dow Jones theory classifies the movement of the prices on the share market into three major categories: 1. Primary Movements, 2. Secondary Movements and 3.

Daily Fluctuations. Timing of investment decisions on the basis of Dow Jones Theory: Ideally speaking the investment manage would like to purchase shares at a time when they have reached the lowest trough and sell them at a time when they reach the highest peak. There are two concepts of investment: 1 Economic Investment: The concept of economic investment means additions to the capital stock of the society.

In choosing the new issues for investment decision, the investor has to read a copy of the prospectus and note the following: 1. Who are the promoters and their past record? Availability of inputs, raw — materials and accessories and the dependence on imports. Project location and its advantages. The investors should not do the following things: 1 He should not put all his eggs in one basket which means that he should not put all his funds in one or two companies. Active strategy is carried out as follows: 1 Aggressive Security Management: Aggressive purchasing and selling of securities to achieve high yields from dividend interest and capital gains.

The characteristics of positive strategy are: 1. Long Term Investment Horizon 2. Evaluate and compare the performances of managed funds. Identify violations of a no arbitrage equilibrium and outline a trading strategy to exploit it. Apply option strategies to achieve a risk-return profile to suit some given market condition. Use Excel to solve portfolio problems proficiently and creatively. Demonstrate your communication, teamwork and leadership skills through class discussions and assignments.

The main reason why people have professionals manage their portfolio is to leverage their expertise in order to generate maximum wealth from their investments. A well-managed portfolio will not only take care of diversification, but also allocate resources per the investor's financial objectives and appetite for risks.

Zinbarg, Arthur Zeikel. Basic Concepts and definitions Risk. Required Return. Expected Return. Present Value. Methods of investment analysis Net Present Value. Sunk costs. Valuation applications. Choice of a valuation method. Decision tree in selection valuation approaches. Practical examples of DDM. One-, two, and multi-stage DDMs. Advantages and Disadvantages. Most frequently used methods. Advantages and disadvantages of each method. Practical example Residual Value Method.

Description of the method and areas of application. Venture Capital Method. This method can be applied to start-up businesses with no sales or cash flows. It reflects the general approach of venture capitalists to investing. Risk Estimation. Estimation of the required rate of return. Motivation and other related issues, Valuing synergies. Lec 24,25 Portfolio returns, Portfolio proportion, Mean or Average return, Variance and covariance, Sample covariance, Expectations, Expected returns, Population variance and Population covariance.

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Download now. Related titles. Carousel Previous Carousel Next. Essentials of Investment Analysis and Portfolio Management. Portfolio Construction Using Fundamental Analysis. Investment Analysis and Portfolio Management Outline. Jump to Page. Search inside document. Course Learning outcomes Investment Analysis Explain the choice of alternative firm valuation models and alternative approaches to arrive at the inputs required by a given firm valuation model.

Course FAQs What is the objective of portfolio management? Course Outline Investment Analysis Most frequently used methods. Professional Service. Bharat Ahuja. Vivek Tr. Raghavendra yadav KM. Fishah Sadri. Pankaj Bhasin.

Introduction to Security Analysis Dr.

Nw investment network They rise for some time and after each rise, they fall. Equity portfolio offered by Portfolio management services helps in adding high saenz mathematics of investment than what a debt portfolio offers. The primary difference between these investment analysis portfolio management scribd types of investing is that applying direct investing investors buy and sell financial assets and manage individual investment portfolio themselves; contrary, using indirect type of investing investors are buying or selling financial instruments of financial intermediaries financial institutions which invest large pools of funds in the financial markets and hold portfolios. Roger Ibbotson Classroom Policy Students should switch off their mobile phone while attending classes and drop it at home during exams. Key words 2. The opposite from the market.
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Zinbarg, Arthur Zeikel. Basic Concepts and definitions Risk. Required Return. Expected Return. Present Value. Methods of investment analysis Net Present Value. Sunk costs. Valuation applications. Choice of a valuation method. Decision tree in selection valuation approaches. Practical examples of DDM. One-, two, and multi-stage DDMs. Advantages and Disadvantages.

Most frequently used methods. Advantages and disadvantages of each method. Practical example Residual Value Method. Description of the method and areas of application. Venture Capital Method. This method can be applied to start-up businesses with no sales or cash flows. It reflects the general approach of venture capitalists to investing.

Risk Estimation. Estimation of the required rate of return. Motivation and other related issues, Valuing synergies. Lec 24,25 Portfolio returns, Portfolio proportion, Mean or Average return, Variance and covariance, Sample covariance, Expectations, Expected returns, Population variance and Population covariance. Learn more about Scribd Membership Home. Read free for days Sign In. Much more than documents. Discover everything Scribd has to offer, including books and audiobooks from major publishers.

Start Free Trial Cancel anytime. Uploaded by Umair Khan Niazi. Date uploaded Aug 04, Did you find this document useful? Is this content inappropriate? Report this Document. Flag for Inappropriate Content. Download now. Related titles. Carousel Previous Carousel Next. Essentials of Investment Analysis and Portfolio Management. Portfolio Construction Using Fundamental Analysis. Investment Analysis and Portfolio Management Outline. Jump to Page. Search inside document. Course Learning outcomes Investment Analysis Explain the choice of alternative firm valuation models and alternative approaches to arrive at the inputs required by a given firm valuation model.

Course FAQs What is the objective of portfolio management? Course Outline Investment Analysis Most frequently used methods. Professional Service. Bharat Ahuja. Vivek Tr. Raghavendra yadav KM. Fishah Sadri. Pankaj Bhasin. Being Sumit Sharma. Ratish Kakkad. Huan En. Rakesh Mishra. Jec Almarza. Garima Singh. Uqaila Mirza. Pandian P. Security analysis and Portfolio Management. Vikas Publishing House Pvt. Ross, S. Portfolios Of Two Risky Assets 5.

Risk Tolerance And Asset Allocation 5. Chapter 6: Portfolio Management and Evaluation of 6. Overview of Portfolio Management 6. Active versus passive portfolio management 6. Strategic versus tactical asset allocation 6. Monitoring and revision of the portfolio 6. Portfolio performance measures 6. Factors to Consider in Measuring Portfolio Performance 6.

Brentani C. Portfolio Management in Practice. Chandra P. Investment analysis and Portfolio Management. Fabozzi F. Fundamentals of Investing. The Hand Book of Financial Instruments. Khan, M. Financial Management: Text and Problems. Pandey, I. Financial Management. Sharpe W. Winfield R. Success in Investment. Course Policies A. Classroom Policy Students should switch off their mobile phone while attending classes and drop it at home during exams. Students should make active participations in class and should forward ideas to the class when they are allowed to do so.

Make-up Exam Policy In the case of missing mid-exam, make-up exams will be arranged based up on the agreement. However, the student will assume the total mark loss during failure to comply with this. Make-up exam for final exam will be arranged by the department council after considering the relevance of reasons and documents attached therein.

Hence, the department head is your contact person in the case of missing final exam. Make-up class Policy The instructor could arrange make up classes in cases when regular classes are interrupted for different reasons. Attendance Policy Regular attendance and punctuality to class are strongly advised. Irregular attendance detracts the students learning and prevents participation in the important intellectual exchanges that occur among students and the instructors.

Assignment Policy Students must submit assignments and term papers on or before the stipulated time provided by the instructor. Overdue and copied submissions will not be acceptable and eventually rewarded no marks. Details of the assessment techniques that will be applied in the course progress are summarized in the table below. Disclaimer This course outline will be followed as closely as possible. However, the faculties reserve the right to modify, supplement, and make changes to this course outline as course needs arise.

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ALTERNATIVE INVESTMENT SERVICES LLC CHICAGO

Bonds: Bonds or debentures represent long-term debt instruments. They are generally of private sector companies, public sector bonds, gilt-edged securities, RBI saving bonds, national saving certificates, Kisan Vikas Patras, bank deposits, public provident fund, post office savings, etc. It includes income shares, growth shares, blue chip shares, etc.

Real estate: The most important asset for individual investors is generally a residential house. In addition to this, the more affluent investors are likely to be interested in other types of real estate, like commercial property, agricultural land, semi-urban land, etc. Precious objects and others: Precious objects are items that are generally small in size but highly valuable in monetary terms.

It includes gold and silver, precious stones, art objects, etc. Other assets includes like that of financial derivatives, insurance, etc. There are two types of portfolio strategies, active portfolio strategy and passive portfolio strategy. The four principal vectors of an active strategy are: 1. Market Timing 2. Sector Rotation 3. Security Selection 4. Use of a specialized concept 1.

Market timing: Market timing is based on an explicit or implicit forecast of general market movements. The advocates of market timing employ a variety of tools like business cycle analysis, advance- decline analysis, moving average analysis, and econometric models. The forecast of the general market movement derived with the help of one or more of these tools are tempered by the subjective judgment of the investor. Often, of course, the investor may go largely by his market sense.

Sector Rotation: The concept of sector rotation can be applied to stocks as well as bonds. It is however, used more commonly with respect to stock component of portfolio where it essentially involves shifting the weightings for various industrial sectors based on their assessed outlook.

For example if it is assumed that cement and pharmaceutical sectors would do well compared to other sectors in the forthcoming period, one may overweight these sectors, relative to their position in market portfolio. With respect to bonds, sector rotation implies a shift in the composition of the bond portfolio in terms of quality, coupon rate, term to maturity and so on.

For example, if there is a rise in the interest rates, there may be shift in long term bonds to medium term or even short-term bonds. But we should remember that a long-term bond is more sensitive to interest rate variation compared to a short-term bond. Security Selection: Security selection involves a search for under priced securities. If an investor resort to active stock selection, he may employ fundamental and or technical analysis to identify stocks that seems to promise superior returns and overweight the stock component of his portfolio on them.

Likewise, stocks that are perceived to be unattractive will be under weighted relative to their position in the market portfolio. As far as bonds are concerned, security selection calls for choosing bonds that offer the highest yield to maturity at a given level of risk.

Use of a specialized Investment Concept: A fourth possible approach to achieve superior returns is to employ a specialized concept or philosophy, particularly with respect to investment in stocks. As Charles D. The passive strategy is implemented according to the following two guidelines: 1.

Create a well-diversified portfolio at a predetermined level of risk. Hold the portfolio relatively unchanged over time, unless it becomes inadequately diversified or inconsistent with the investors risk-return preferences. Risk of default: To assess the risk of default on a bond, one may look at the credit rating of the bond. If no credit rating is available, examine relevant financial ratios like debt-to-equity ratio, times interest earned ratio, and earning power of the firm and assess the general prospects of the industry to which the firm belongs Tax Shield: In yesteryears, several fixed income avenues offered tax shield, now very few do so.

Liquidity: If the fixed income avenue can be converted wholly or substantially into cash at a fairly short notice, it possesses liquidity of a high order. Fundamental analysis focuses on fundamental factors like the earnings level, growth prospects, and risk exposure to establish the intrinsic value of a share. The recommendation to buy, hold, or sell is based on a comparison of the intrinsic value and the prevailing market price.

Random selection approach is based on the premise that the market is efficient and securities are properly priced. This is the phase of portfolio execution which is often glossed over in portfolio management literature. However, it is an important practical step that has a significant bearing on the investment results.

In the execution stage, three decision need to be made, if the percentage holdings of various asset classes are currently different from the desired holdings. Portfolio revision involves changing the existing mix of securities. This may be effected either by changing the securities currently included in the portfolio or by altering the proportion of funds invested in the securities.

New securities may be added to the portfolio or some existing securities may be removed from the portfolio. Thus it leads to purchase and sale of securities. The objective of portfolio revision is similar to the objective of selection i. The need for portfolio revision has aroused due to changes in the financial markets since creation of portfolio.

It has aroused because of many factors like availability of additional funds for investment, change in the risk attitude, change investment goals, the need to liquidate a part of the portfolio to provide funds for some alternative uses. The portfolio needs to be revised to accommodate the changes in the investors position.

Portfolio Revision basically involves two stages: Portfolio Rebalancing: Portfolio Rebalancing involves reviewing and revising the portfolio composition i. There are three basic policies with respect to portfolio rebalancing: buy and hold policy, constant mix policy, and the portfolio insurance policy. Under a buy and hold policy, the initial portfolio is left undisturbed.

It is essentially a buy and hold policy. Irrespective of what happens to the relative values, no rebalancing is done. For example, if the initial portfolio has a stock-bond mix of and after six months it happens to be say because the stock component has appreciated and the bond component has stagnated, than in such cases no changes are made.

The constant mix policy calls for maintaining the proportions of stocks and bonds in line with their target value. For example, if the desired mix of stocks and bonds is say , the constant mix calls for rebalancing the portfolio when relative value of its components change, so that the target proportions are maintained. The portfolio insurance policy calls for increasing the exposure to stocks when the portfolio appreciates in value and decreasing the exposure to stocks when the portfolio depreciates in value.

The basic idea is to ensure that the portfolio value does not fall below a floor level. Portfolio Upgrading: While portfolio rebalancing involves shifting from stocks to bonds or vice versa, portfolio- upgrading calls for re-assessing the risk return characteristics of various securities stocks as well as bonds , selling over-priced securities, and buying under-priced securities. It may also entail other changes the investor may consider necessary to enhance the performance of the portfolio.

It is the process that is concerned with assessing the performance of the portfolio over a selected period of time in terms of return and risk. Through portfolio evaluation the investor tries to find out how well the portfolio has performed. The portfolio of securities held by an investor is the result of his investment decisions.

Portfolio evaluation is really a study of the impact of such decisions. This involves quantitative measurement of actual return realized and the risk born by the portfolio over the period of investment. It provides a mechanism for identifying the weakness in the investment process and for improving these deficient areas. The evaluation provides the necessary feedback for designing a better portfolio next time.

A proper investment decision-making of what to buy and sell 2. Proper money management in terms of investment in a basket of assets to satisfy the asset preferences of the investors. Reduce the risk and increase the returns. Balancing fixed interest securities against equities. Balancing high dividend payment companies against high earning growth companies as required.

Finding the income or growth portfolio as required. Balancing transaction costs against capital gains from rapid switching. Balancing income tax payable against capital gains tax. Retaining some liquidity to seize upon bargains. What is Risk? Risk is classified into: Systematic risk or Market related risk and Unsystematic risk or Company related risk.

Market Risk 1. Business Risk 2. Interest Rate Risk 2. Internal Risk 3. Inflation Rate Risk 3. It cannot be avoided. It relates to economic trends with effect to the whole market. This is further divided into the following: 1. Market risks: A variation in price sparked off due to real, social political and economical events is referred as market risks. Interest rate risks: Uncertainties of future market values and the size of future incomes, caused by fluctuations in the general level of interest is referred to as interest rate risk.

Here price of securities tend to move inversely with the change in rate of interest. Inflation risks: Uncertainties in purchasing power is said to be inflation risk. This is further divided into: 1. Business risk: Business risk arises due to changes in operating conditions caused by conditions that thrust upon the firm which are beyond its control such as business cycles, government controls, etc.

Internal risk: Internal risk is associated with the efficiency with which a firm conducts its operations within the broader environment imposed upon it. Financial risk: Financial risk is associated with the capital structure of a firm. A firm with no debt financing has no financial risk. The guidelines have been made to protect the interest of investors. The salient features of these guidelines are: The nature of portfolio management service shall be investment consultant.

The portfolio manager shall not guarantee any return to his client. Clients funds will be kept in a separate bank account. The portfolio manager shall act as trustee of clients funds. The portfolio manager can invest in money or capital market. Purchase and sale of securities will be at a prevailing market price.

The person designated to manage the portfolio is called Portfolio Manager. The Portfolio Manager advises, manages and administers the securities and funds on behalf of the entrusting client. It comprises of different types of assets and securities. Portfolio management refers to the management or administration of a portfolio of securities to protect and enhance the value of the underlying investment.

It is also known as Investment Management. Portfolio Management Services, called, as PMS are the advisory services provided by corporate financial intermediaries. It enables investors to promote and protect their investments that help them to generate higher returns. It devotes sufficient time in reshuffling the investments on hand in line with the changing dynamics.

It provides the skill and expertise to steer through these complex, volatile and dynamic times. It is a choice of selecting and revising spectrum of securities to it with the characteristics of an investor. It prevents holding of stocks of depreciating-value. It acts as a financial intermediary and is subject to regulatory control of SEBI. Sometimes the Portfolio Manager may also have separate ready schemes for the client to choose from. As a result of this customization, client, with his specific needs, benefits.

The service level in the form of reporting transactions, holdings statements etc. Benefits of pms Benefits of PMS 1. Personalized Advice: A client gets investment advice and strategies from expert Fund Managers. An Investment Relationship Manager will ensure that you receive all the services related to your investment needs.

The personalized services also translates into zero paper work and all your financial statements will be e-mailed 2. Professional Management: An experienced team of portfolio managers ensure your portfolio is tracked, monitored and optimized at all times.

Continuous Monitoring: The clients are informed about your investment decisions. A dedicated website and a customer services desk allow you to keep a tab on portfolios performance. Timing: Portfolio managers preserve clients money on time. Portfolio management services PMS help in allocating right amount money in right type of saving plan at right time. This means portfolio managers analyzes the market and provides his expert advice to the client regarding the amount he should take out at the time of big risk in stock market.

Professional Management: PMS provides benefits of professional money management with the flexibility, control and potential tax advantages of owing individual stocks or other securities. The portfolio managers take care of all the administrative aspects of clients portfolio with a monthly or semiannual reporting on overall status of the portfolio and performance.

Flexibility: Portfolio managers plan saving of his client according to their need and preferences. But sometimes, portfolio managers can invest clients money according to his preference because they know the market very well than his client. It is his clients duty to provide him a level of flexibility so that he can manage the investment with full efficiency and effectiveness.

Portfolio management services PMS handles all types of administrative work like opening a new bank account or dealing with any financial settlement or depository transaction. PMS also help in managing the tax of his client based on detailed statement of the transaction found on the clients portfolio.

PMS also provide a Portfolio manager to the client who acts as personal relationship manager though whom the client can interact with the fund manager at any time depending on his own preferences such as: i. To discuss any concern saving or money, the client can interact with portfolio manager on the monthly basis.

The client can discuss on any major changes he want in his asset allocation and investment strategies. Portfolio manager Portfolio Manager Portfolio Manager is a professional who manages the portfolio of an investor with the objective of profitability, growth and risk minimization. According to SEBI, Any person who pursuant to a contract or arrangement with a client, advises or directs or undertakes on behalf of the client the management or administration of a portfolio of securities or the funds of the client, as the case may be is a portfolio manager.

He is expected to manage the investors assets prudently and choose particular investment avenues appropriate for particular times aiming at maximization of profit. He tracks and monitors all your investments, cash flow and assets, through live price updates. The manager has to balance the parameters which defines a good investment i. The goal is to obtain the highest return for the client of the managed portfolio. Discretionary portfolio manager is the one who individually and independently manages the funds of each client in accordance with the needs of the client and non-discretionary portfolio manager is the one who manages the funds in accordance with the directions of the client.

Who can be a Portfolio Manager? Only those who are registered and pay the required licence fee to SEBI are eligible to operate as Managers. An applicant for this purpose should have necessary infrastructure with professionally qualified person and with a minimum of two person with experience in this business and minimum net worth of Rs.

The certificate once granted is valid for three years. Fees payable for registration are Rs2. From the fourth year onwards, renewal fees per annum are Rs. These are subject to change by SEBI. The SEBI has imposed number of obligation and code of conduct on portfolio manager. The portfolio manager should have a high standard of integrity, honesty and should not have been convicted of any economic offence or moral turpitude. He should not resort of rigging up of prices, insider trading or creating false market etc.

Their books of account are subjected to inspection and audited by SEBI. The observance of code of conduct and guidelines given by SEBI are subject to inspection and penalties for violation are imposed. The Manager has to submit periodical returns and documents as may be required by the SEBI from time-to-time. The portfolio manager shall act in a fiduciary capacity with regard to the client's funds.

The portfolio manager shall transact the securities within the limitations placed by the client. The portfolio manager shall not derive any direct or indirect benefit out of the client's funds or securities. The portfolio manager shall not borrow funds or securities on behalf of the client.

The portfolio manager shall not lend securities held on behalf of clients to a third person except as provided under these regulations. Fixed- linked management fee. Performance-linked management fee. Fixed-linked management fee: In fixed-linked management fee the clients usually pays between Performance-linked management fee: In performance- linked management fees the client pays a flat ranging between 0. The profits are calculated on the basis of high watermarking concept.

This means that the fee is paid only on the basis of positive return on investment. The portfolio manager can also claim some separate charges gained from brokerage, custodial service and tax payments. A portfolio manager shall maintain a high standard of integrity fairness. The clients funds should be deployed as soon as he receives. A portfolio manager shall render all times high standards and unbiased service. A portfolio manager shall not make any statement that is likely to be harmful to the integration of other portfolio manager.

A portfolio manager shall not make any exaggerated statement. A portfolio manager shall not disclose to any client or press any confidential information about his client, which has come to his knowledge. A portfolio manager shall always provide true and adequate information. A portfolio manager should render the best pose advice to the client. Keep the security, safety of principles intact both in terms of money as well as its purchasing power.

Stability of the flow of income so as to facilities planning more accurately and systematically the reinvestment or consumption of income. To attain capital growth by re-investing in growth securities or through purchase of growth securities. Marketability of the security which is essential for providing flexibility to the investment portfolio. Liquidity i. Diversification: The basic objective of building a portfolio is to reduce the risk of loss of capital and income by investing in various types of securities and over a wide range of industries.

Favorable tax status: the effectively yield a investors gets from his investments depends on tax to which it is subject. Capital growth which can be attained by reinvesting in growth securities or through purchased of growth securities. Investors must obtain a disclosure document from the portfolio manager broadly covering manner and quantum of fee payable by the clients, portfolio risks, performance of the portfolio manager etc.

Investors must check whether the portfolio manager has a necessary infrastructure to effectively service their requirements. Investors must enter into an agreement with the portfolio manager. Investors should make sure that they receive a periodical report on their portfolio as per the agreed terms.

Investors must make sure that portfolio manager has got the respective portfolio account by an independent charted accountant every year and that the certificate given by the charted accountant is given to an investor by the portfolio manager. In case of complaints, the investors must approach the authorities for redressal in a timely manner.

Donts: Investors should not deal with unregistered portfolio managers. They should not hesitate to approach the authorities for redressed of the grievances. They should not invest unless they have understood the details of the scheme including risks involved. Should not invest without verifying the background and performance of the portfolio manager. Two persons agree to exchange gms of gold three months later at Rs. This is an example of a A. Future Contract B.

Forward Contract C. Spot Contract D. Future D. To buy or sell an asset of a certain time in the future at a certain price B. To buy or sell asset on a specific date for a specified price A. A is correct B. B is correct C. Both are correct D. Both are incorrect. Semi strong form efficiency B. Weak-form efficiency C. Strong form efficiency. Advertisements B. Financial statements C. Products D. Vision statement.

High premium or low premium policies B. Fixed or variable policies C. Assurance or endowment policies D. Growth or value policies. Security of ABC Ltd. The fair value of a one-month futures contract on ABC Ltd.

A portfolio comprises of two stocks A and B. What is the portfolio return? In spite of this error may creep in. Any mistake, error or discrepancy noted may be brought to our notice, which, shall be taken care of in the next printing. It is notified that neither the publisher nor the author or seller will be responsible for any damage or loss of action to anyone of any kind, in any manner, therefrom. ROOTS Institute of Financial Markets, its directors, author s , or any other persons involved in the preparation of this publication expressly disclaim all and any contractual, tortuous, or other form of liability to any person purchaser of this publication or not in respect of the publication and any consequences arising from its use, including any omission made, by any person in reliance upon the whole or any part of the contents of this publication.

No person should act on the basis of the material contained in the publication without considering and taking professional advice. Learn more about Scribd Membership Home. Read free for days Sign In. Much more than documents. Discover everything Scribd has to offer, including books and audiobooks from major publishers.

Start Free Trial Cancel anytime. Uploaded by Meenakshi. Visit www. Date uploaded Jan 03, Did you find this document useful? Is this content inappropriate? Report this Document. Flag for Inappropriate Content. Download now. For Later. Related titles. Carousel Previous Carousel Next. Jump to Page. Search inside document. All the above Q. False Q. None of the above Q. All of the above Q. Primary Market Q. None Q. Derivative Market Q. Higher, Less Q. False 4.

None 5. None 6. Cash flow from investing activities 7. Cash flow from investing activities 8. False Retention Ratio is A. Any of the above 2. Foreign Exchange 3. Foreign 4. None of the above 5. All of the above 6. None of the above 8. Swaption 9. Strong form efficiency 2. Vision statement 3.

Active B. Passive 4. Growth or value policies 5. TRUE 6. Accounts payable appears in the Balance Sheet of companies. TRUE B. FALSE 8. Deep Shikha. Pankaj Bhasin. Umair Khan Niazi. Sethu Raman K R. Morcy Jones. Hamid Ilyas. Amit Kumar.

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B B A 4th year //Investment Analysis \u0026 Portfolio Management // Chapter-2: Class-1.

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Investment Analysis and Portfolio Management-KRISTINA forexmarvel.com - Free ebook download as PDF File .pdf), Text File .txt) or read book online for free. Investment Analysis & Portfolio Management - Free download as Powerpoint Presentation .ppt /.pptx), PDF File .pdf), Text File .txt) or view presentation slides. investment analysis, whilst a private individual may make use of the services of a financial advisor or a financial institution which offers portfolio management.