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Shumba600@yahoo.co.ukInvestment and Portfolio ManagementSession 1Nature and scope of investmentWhat is investment?Investment is the sacrifice of certain present value for (possibly uncertain) futurevalue. It deals with financial markets and security pricing. Investment fieldscomprise the buy and the sell side. The buy side include management of pensionfunds, insurance companies, mutual funds as well as providing advice andmanagement of individuals retirement funds and other savings. A manager of apension fund for example may participate in determining how much of the fundshould be invested in stocks and bonds, which stocks and bonds should bepurchased, and when specific stocks and bonds should be sold.The sell side includes security analysis which requires analysing economic,market and financial information and brokerage – related tasks which involveselling securities and executing trades for customers. A security analyst forexample may specialize in a particular focus on the major firms in that industry.Using economic market and company specific information, the analyst mayevaluate the performance of a particular company’s stock and make forecastswith respect to the company’s future earnings.
 Investment vs. savings
Savings represent forgone consumption, with the former restricted to realinvestment of the sort that increases national output in the future. While thisdefinition may prove useful in other contexts, it is not especially helpful foranalysing the specifics of particular investments for even large classes ofinvestment media. A deposit in a savings account at a bank is investment in theeyes of the depositor. Even cash stored in the mattress can be viewed asinvestment: one yielding a dollar for every dollar invested (or less in the event offire or theft)
 
Shumba600@yahoo.co.uk
 Real VS Financial Investment 
Some investments are simply transactions among people. Others involve nature.The latter are “real” investment; the former are not.In a complex modern economy, much investment is of the financial rather thanthe real variety. But highly developed institutions for financial investments greatlyfacilitate real investment. By far and large, the two forms are complimentary, notcompetitive.
 Investment Speculation and Gambling 
Investmentspeculategamble
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to commit (money) in order to earn a financial return.
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To assume a business risk in hope of gain; especially to buy orsell in expectation of profit from market fluctuations
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To bet on an uncertain outcome.All the three definitions fall within the scope of investment as defined.The term speculate is sometimes used to identify the horizon of the investor, e.g.someone who buys a piece of land on which to build a house in which to livemight be termed an investor, while a real estate agent also buys the land andbuilds a house for almost immediate resale might be termed a specular. Theformer - direct benefits - the later - others evaluate of those benefits (i.e. priceat the onset).Buy a bond/loanFinancial investmentBuy factory Real investment
 
Shumba600@yahoo.co.ukA speculator trades on the basis of information she believes is not yet known toor properly evaluated by others. An investor makes no such assumption.Some people use the term ‘speculative’ to refer to high risk investments, possiblywithout commensurately high return. e.g. a new stock issue may be denoted a“speculative investment”. A final use of the term “speculative” is simply to denoteactivities of which you disapprove. “ones friends are investors, one’s enemies arespeculators.
Gamble
A person might be considered a gambler if he or she takes on a risk that isgreater than commensurate with expected return. e.g. playing lotto – the risk isgreat, yet on average the players return is negative. Investment at he stockmarket is also risk but the return is positive on average.FOCUS OF THE OUTLINE
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Investment Environment and the part if plays in successful decisionmaking.
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Characteristic of investment assets and markets in which they aretraded. We summarise the general nature of financial investmentshow the markets for them operate.
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Summary measures of the returns the investment have generatedin the past.
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Capital Market Theory
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Develop an integrative theory of optimal decision making andshows how prices are formed in competitive financial markets in away that reflects the expectations and preferences of all marketsparticipants.
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Models how rational investors make decision in an uncertainenvironment.
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Valuation of Securities
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Valuation of instruments e.g. stocks, bonds, options
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Characteristics that determine value of securities
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Forecasting, financial planning and portfolio choice andperformance measurement.
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groudonxa

what a awsome book if anyone can send it to me i would apprecciate groudonx@gmail.com

reply04 / 25 / 2010
madarchod62

you an plz send me a copy of the document . being a student of the capital markets ,it would be of immense academic help.my mail id is manishmfc@gmail.com. Thanking you. yours sincerely,

reply02 / 26 / 2010
uday_gnit143

thanks its good report

reply01 / 17 / 2010
Kenneth Varquez

nerdme@ymail.com that's my email ad... thanks! God Bless

reply09 / 17 / 2009
Kenneth Varquez

can i have the access sir/mam to download this one? i really need it. Please?

reply09 / 17 / 2009
yvans1

really good material.

reply06 / 22 / 2009
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