1. Introduction - Basics Of Investm
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Investment Analysis and Portfolio Management Alok Kumar
08/31/08
Introduction and Basics of Investments
1
What this Paper is All About?
The purpose of this paper is to help you learn how to manage your Money so that you will derive the maximum benefit from what you earn.
To accomplish you need 1) to learn about investment alternatives that are available today, 2) to develop a way of analyzing and thinking about investments that will remain with you in years to come when new and different opportunities become available.
The paper mixes theory, practical, and application of the theories using modern/contemporary tool Microsoft Excel.
Evaluation – (Internal -30) and (External- 70).
Classes – 24 classes 08/31/08
Introduction and Basics of Investments
2
Topics and References
The detailed topics are given separately as a file, but in brief we shall be discussing over following topics a) Investments Basics – Risk and Return Measurement b) Modern Portfolio Theories c) Equity Analysis and Debt Analysis d) Portfolio Optimization e) Portfolio Evaluation
References: a) Investment Analysis and Portfolio management by Frank K. Reilly and Keith C. Brown. – Thomson Publication b) Investments by William F. Sharpe, Gordon J. Alexander, and Jeffery V. Bailey. – Prentice Hall Publication c) Class Notes and Handouts. 08/31/08
Introduction and Basics of Investments
3
Contact Me
I will be available in the Institute on Wednesdays. Your doubts are most welcome and you can contact me through my e-mail id [email protected].
I shall be announcing also once in a week doubt session, so anybody has got problem can contact me on assigned time and date.
I have certain request – •
I don’t allow late comers to enter my class.
•
I don’t like listening to ring tones so please put your phone on silent mode and attend calls only in case there is an emergency that also with prior permission.
•
I wont accept delayed work, so submit on time, none of the excuses will be entertained.
•
You got to have more than 12 attendance to participate in internal marks.
08/31/08
Introduction and Basics of Investments
4
Contact Detail Alok Kumar Mind Xpansion Portfolio Private Ltd 53/4477, Rehgar Pura Karol Bagh, New Delhi-110005 E-Mail – [email protected] Desk No. – (91)-(11)-(45085396)
08/31/08
Introduction and Basics of Investments
5
Let us Start the session!!!
08/31/08
Introduction and Basics of Investments
6
Investment
Is the current commitment of rupees for a period of time in order to derive future payments that will compensate the investor for a) the time the funds are committed (Pure time value of money or rate of interest) b) the expected rate of inflation, and c) the uncertainty of the future of payments (investment risk so there has to be risk premium)
So in short individual does trade a rupee today for some expected future stream of payments that will be greater than the current outlay.
Investor invest to earn a return from savings due to their deferred consumption so they require a rate of return that compensates them. 08/31/08
Introduction and Basics of Investments
7
Investment So we answered following Questions?
•
Why people invest?
•
What they want from their investment?
And now we will discuss
•
Where all they can invest and what parameters they adopt to invest?
•
How they measure risk and return and how they
08/31/08
Introduction and Basics of Investments
8
Investment Avenues Gold
Shares
Silver Real Estate
Bonds
Indira Vikas Patra Post Office Deposits Bank Deposits
Mutual Funds Debentures PF
NSC
08/31/08
Introduction and Basics of Investments
9
Investment Investments Parameters
•
Return
•
Risk
•
Time Horizon
•
Tax Considerations
•
Liquidity
•
Marketability
08/31/08
Introduction and Basics of Investments
10
Risk-Return Trade off •Derivatives
Return •Shares
•MFs Equity Fund •Real Estate •MFs Debt Funds
•Debentures •NSC, Post-Office Deposit Kisan Vikas Patra •PF •Bonds •Bank Deposit •Gold
Risk 08/31/08
Introduction and Basics of Investments
11
Next How to Measure Return and Risk???
08/31/08
Introduction and Basics of Investments
12
Investment Return
•
•
08/31/08
Risk
Historical
• Historical
HPR
• Expected
HPY
Expected
Introduction and Basics of Investments
13
08/31/08
Introduction and Basics of Investments
1
What this Paper is All About?
The purpose of this paper is to help you learn how to manage your Money so that you will derive the maximum benefit from what you earn.
To accomplish you need 1) to learn about investment alternatives that are available today, 2) to develop a way of analyzing and thinking about investments that will remain with you in years to come when new and different opportunities become available.
The paper mixes theory, practical, and application of the theories using modern/contemporary tool Microsoft Excel.
Evaluation – (Internal -30) and (External- 70).
Classes – 24 classes 08/31/08
Introduction and Basics of Investments
2
Topics and References
The detailed topics are given separately as a file, but in brief we shall be discussing over following topics a) Investments Basics – Risk and Return Measurement b) Modern Portfolio Theories c) Equity Analysis and Debt Analysis d) Portfolio Optimization e) Portfolio Evaluation
References: a) Investment Analysis and Portfolio management by Frank K. Reilly and Keith C. Brown. – Thomson Publication b) Investments by William F. Sharpe, Gordon J. Alexander, and Jeffery V. Bailey. – Prentice Hall Publication c) Class Notes and Handouts. 08/31/08
Introduction and Basics of Investments
3
Contact Me
I will be available in the Institute on Wednesdays. Your doubts are most welcome and you can contact me through my e-mail id [email protected].
I shall be announcing also once in a week doubt session, so anybody has got problem can contact me on assigned time and date.
I have certain request – •
I don’t allow late comers to enter my class.
•
I don’t like listening to ring tones so please put your phone on silent mode and attend calls only in case there is an emergency that also with prior permission.
•
I wont accept delayed work, so submit on time, none of the excuses will be entertained.
•
You got to have more than 12 attendance to participate in internal marks.
08/31/08
Introduction and Basics of Investments
4
Contact Detail Alok Kumar Mind Xpansion Portfolio Private Ltd 53/4477, Rehgar Pura Karol Bagh, New Delhi-110005 E-Mail – [email protected] Desk No. – (91)-(11)-(45085396)
08/31/08
Introduction and Basics of Investments
5
Let us Start the session!!!
08/31/08
Introduction and Basics of Investments
6
Investment
Is the current commitment of rupees for a period of time in order to derive future payments that will compensate the investor for a) the time the funds are committed (Pure time value of money or rate of interest) b) the expected rate of inflation, and c) the uncertainty of the future of payments (investment risk so there has to be risk premium)
So in short individual does trade a rupee today for some expected future stream of payments that will be greater than the current outlay.
Investor invest to earn a return from savings due to their deferred consumption so they require a rate of return that compensates them. 08/31/08
Introduction and Basics of Investments
7
Investment So we answered following Questions?
•
Why people invest?
•
What they want from their investment?
And now we will discuss
•
Where all they can invest and what parameters they adopt to invest?
•
How they measure risk and return and how they
08/31/08
Introduction and Basics of Investments
8
Investment Avenues Gold
Shares
Silver Real Estate
Bonds
Indira Vikas Patra Post Office Deposits Bank Deposits
Mutual Funds Debentures PF
NSC
08/31/08
Introduction and Basics of Investments
9
Investment Investments Parameters
•
Return
•
Risk
•
Time Horizon
•
Tax Considerations
•
Liquidity
•
Marketability
08/31/08
Introduction and Basics of Investments
10
Risk-Return Trade off •Derivatives
Return •Shares
•MFs Equity Fund •Real Estate •MFs Debt Funds
•Debentures •NSC, Post-Office Deposit Kisan Vikas Patra •PF •Bonds •Bank Deposit •Gold
Risk 08/31/08
Introduction and Basics of Investments
11
Next How to Measure Return and Risk???
08/31/08
Introduction and Basics of Investments
12
Investment Return
•
•
08/31/08
Risk
Historical
• Historical
HPR
• Expected
HPY
Expected
Introduction and Basics of Investments
13
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