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Characteristics of Securities
Securities are tradable and represent a financial value. Securities are fungible.
Classification of Securities
Debt Securities: Tradable assets which have clearly defined terms and conditions are
called debt securities. Financial instruments sold and purchased between parties with clearly mentioned interest rate, principal amount, maturity date as well as rate of returns are called debt securities.
Derivatives: Derivatives are financial instruments with specific conditions under which
payments need to be made between two parties.
Portfolio Theory
Portfolio theory was proposed by Harry M. Markowitz of University of Chicago. According to Markowitzs portfolio theory, portfolio managers should carefully select and combine financial products on behalf of their clients for guaranteed maximum returns with minimum risks. Portfolio theory helps portfolio managers to calculate the amount of return as well as risk for any investment portfolio.