SWOT ANALYSIS OF FINANCIAL ASSETS

1) DEBT
Strength
 The rate of return on debt instruments does not fluctuate as in
the case of equity
 The Debt instruments do not carry any volatility
 The certainty of return of cash flows on maturity
Weakness
 The rate of return is less compared to equity returns
 Debt instruments are usually considered good only when the
markets are not performing well
OPPORTUNITIES
 Stable free cash flow provides opportunities to invest in
adjacent product segments
THREATS
 If the market interest rate rises above the rate of debt
instrument, the demand for it falls and hence the market price
of the debt product also falls
 If the interest rate changes during the lifetime of the debt
product, interest payment fixed at a past date becomes
inadequate in todays time

2) Equity

STRENGTHS
 Equity investments offer a higher rate of return compared to
other securities classes
  Equity investors become owners in the company to the extend
of the shares purchased
 Equity investments are considered as a good investment for the
risk-taking investors as the offer the possibility of higher
returns
 Equity investments provide opportunity for capital appreciation

WEAKNESS
 Equity investments are more volatile when compared to other
type of securities
 If equity investments have significant upside, they also have
similar downside.
 The cost of equity is higher compared to the cost of other
instruments
OPPORTUNITY
 Equity investments offer capital appreciation possibility.
 Equity investments have a greater possibility of creating higher
value in the long run
THREATS
 In case of liquidation of the company, it is possible that an
equity investor may lose complete value of his investments
 Fluctuation in the market price is a threat to equity investments

3) COMMODITIES
STRENGTH
 Commodities such as gold are considered valuable assets
across the world
  Commodities can be used in order to hedge against equity
investment
 Commodities such as gold act as a safe haven in times when
economies do not perform well
WEAKNESS
 Trading in commodities has a high degree of complexity
 Commodity prices are affected due to multiple factors such as
demand, supply, inflation etc
OPPORTUNITIES
 When the equity markets are volatile, one can invest in
Commodity futures, as it offers higher liquidity compare to
other financial assets like real estatae
THREATS
 Restrictions on imports and government regulations can create
a high degree of risk for the investment
4 ) REAL ESTATAE

STRENGTHS

 It is an investment asset that increases in value over time.

 It is less volatile (risky) than other investment assets
particularly equities.
 The owner of a real estate asset has full rights over the asset
and can add value to it through refurbishment and good
management.
 It is used to hedge inflation risk and is a good store of wealth.
 Preferred collateral/security by financial institutions.
 There is no single market for real estate i.e. it can be traded at
auctions or open markets by estate agents and surveyors.

WEAKNESSES

 Ownership rights cannot be easily transferred.

 It is a highly illiquid asset.
  It requires a large capital to invest in.
 Low supply.

OPPORTUNITIES

 Global demand for real estate is strong and high.

 Real estate is poised for rapid growth.
 Potential to diversify into other sectors.
 New sectors offer great potential i.e. student accommodation
& care homes.

THREATS

 Economic slowdown may affect demand i.e. periods of

recession.
 Competition from other investment asset classes such as
equities and bonds.
 Seasonal demand may affect prices