UNIT 1 – INTRODUCTION

1.1 Investment:
Investment refers to the act of allocating money, time, or resources to an asset or endeavor with
the expectation of generating a future return or benefit. Investments are made with the goal of
increasing one's wealth or achieving specific financial objectives, such as saving for retirement,
funding a child's education, or growing a business.
Here are some common types of investments:
 Stocks: Investing in stocks means purchasing ownership shares in a company. Investors
hope that the value of these shares will increase over time, allowing them to sell the
shares at a profit.
 Bonds: Bonds are debt securities issued by governments, municipalities, or corporations.
When you buy a bond, you are essentially lending money to the issuer in exchange for
periodic interest payments and the return of the bond's face value at maturity.
 Real Estate: Real estate investment involves purchasing properties (such as residential or
commercial real estate) with the expectation of earning rental income or realizing capital
gains when selling the property.
 Mutual Funds: Mutual funds pool money from multiple investors to invest in a
diversified portfolio of stocks, bonds, or other securities. They are managed by
professional fund managers.
 Exchange-Traded Funds (ETFs): ETFs are similar to mutual funds but are traded on stock
exchanges like individual stocks. They offer diversification and can track various market
indices.
 Commodities: Investors can buy commodities like gold, silver, oil, and agricultural
products as a way to diversify their portfolios and potentially profit from price
fluctuations.
1.2 Investment Vs Speculation:
Investment and speculation are both ways to put money into an asset with the hope of making a
profit. However, there are some key differences between the two.
* **Investment** is the commitment of money or capital to something with the expectation of
profit or other benefits. Investors typically invest for the long term and are looking to make
money through capital appreciation, which is the increase in the value of the asset over time.
They may also earn income from dividends or interest payments.
* **Speculation** is the act of buying an asset with the hope of selling it for a profit in the near
future. Speculators are typically looking to make money quickly and are willing to take on more
risk than investors. They may use technical analysis or other methods to try to predict future
price movements.
Here is a table summarizing the key differences between investment and speculation:
Characteristic Investment Speculation
Time horizon Long term Short term
Risk tolerance Low to moderate High
Goals Capital appreciation, income Profit
Methods Fundamental analysis, Technical analysis
technical analysis
It is important to note that there is no clear dividing line between investment and speculation.
Some investments, such as stocks, can be considered both investments and speculations.
Ultimately, the difference between investment and speculation is a matter of intent. Investors are
looking to make money over the long term, while speculators are looking to make money
quickly.
Investment and speculation are two distinct approaches to allocating capital, and they differ
primarily in terms of their objectives, risk profiles, and time horizons. Here's a breakdown of the
key differences between investment and speculation:
**Investment:**
1. **Objective:** The primary objective of investment is to preserve and grow capital over the
long term. Investors typically aim for stable, consistent returns and are often focused on
achieving specific financial goals, such as retirement, education, or wealth preservation.
2. **Time Horizon:** Investors have a longer time horizon in mind. They are willing to hold
their assets for an extended period, sometimes decades, to benefit from compound growth and
minimize the impact of short-term market fluctuations.
3. **Risk Tolerance:** While there is still risk associated with investments, investors generally
prioritize assets with a lower level of risk and volatility. They may opt for diversified portfolios
and income-generating assets like stocks, bonds, and real estate.
4. **Research and Analysis:** Investors typically conduct thorough research and analysis before
making investment decisions. They often focus on fundamental factors such as a company's
financial health, management, and growth potential.
5. **Behavior:** Investors tend to make rational decisions based on a well-defined investment
strategy. Emotional reactions to market fluctuations are minimized, and they usually stay
committed to their long-term plan.
**Speculation:**
1. **Objective:** Speculators aim to profit from short- to medium-term price fluctuations in
assets, often with little regard for the underlying fundamentals. Speculation is driven by the
expectation of capitalizing on market volatility.
2. **Time Horizon:** Speculators have a shorter time horizon compared to investors. They are
more focused on short-term gains and may buy and sell assets relatively quickly.
3. **Risk Tolerance:** Speculators are willing to take on higher levels of risk. They often
engage in trading highly volatile assets, such as cryptocurrencies, penny stocks, or options,
which can lead to substantial gains or losses.
4. **Research and Analysis:** Speculators may rely on technical analysis, charts, and market
sentiment more than fundamental analysis. They may base their decisions on patterns and trends
rather than the intrinsic value of an asset.
5. **Behavior:** Speculation can involve more impulsive and emotionally driven decision-
making. Speculators may chase hot trends, engage in day trading, and be more prone to panic
selling or FOMO (fear of missing out).
In summary, the key distinction between investment and speculation lies in their objectives, time
horizons, risk tolerance, research methods, and behavior. Investors prioritize long-term wealth
accumulation and are generally more risk-averse, while speculators aim for short-term gains and
are willing to take on higher risks. It's important for individuals to define their financial goals
and risk tolerance when deciding whether to invest or speculate, and to choose strategies that
align with their objectives and comfort levels.
1.3 Characteristics of Investment:
The characteristics of an investment are the qualities that make it a good or bad investment.
Some of the most important characteristics of an investment include:
* **Risk:** The risk of an investment is the likelihood that it will lose value. Some investments,
such as stocks, are more risky than others, such as bonds.
* **Return:** The return on an investment is the amount of money you expect to make from it.
Some investments, such as stocks, have the potential to generate high returns, but they also carry
more risk.
* **Liquidity:** The liquidity of an investment is how easily you can sell it and get your money
back. Some investments, such as stocks, are more liquid than others, such as real estate.
* **Time horizon:** The time horizon of an investment is the amount of time you are willing to
invest it for. Some investments, such as stocks, are better suited for long-term investments, while
others, such as bonds, are better suited for shorter-term investments.
* **Cost:** The cost of an investment is the amount of money you have to pay to buy it. Some
investments, such as mutual funds, have high costs, while others, such as stocks, have low costs.
* **Tax benefits:** Some investments, such as real estate, offer tax benefits. This means that
you may be able to deduct some of the costs of the investment from your taxes.
The specific characteristics that are important to you will depend on your individual
circumstances and investment goals. For example, if you are saving for retirement, you may
want to focus on investments that have a low risk and a long time horizon. If you are looking to
make a quick profit, you may want to focus on investments that have a high risk and a shorter
time horizon.
It is important to carefully consider the characteristics of any investment before you make a
purchase. By understanding the risks and rewards involved, you can make more informed
investment decisions.
Here are some additional characteristics of investments that may be important to consider:
* **Diversification:** Diversification is the practice of investing in a variety of assets to reduce
your risk. By diversifying your portfolio, you can reduce the impact of any one investment losing
value.
* **Volatility:** Volatility is the measure of how much an investment's price fluctuates. Some
investments, such as stocks, are more volatile than others, such as bonds.
* **Liquidity:** Liquidity is the ease with which an investment can be bought or sold. Some
investments, such as stocks, are more liquid than others, such as real estate.
* **Fees:** Fees are the costs associated with investing in an asset. Some investments, such as
mutual funds, have high fees, while others, such as stocks, have low fees.
* **Taxes:** Taxes can have a significant impact on the returns of an investment. Some
investments, such as real estate, are subject to capital gains taxes, while others, such as stocks,
are not.
By understanding the characteristics of investments, you can make more informed investment
decisions and reduce your risk.
1.4 Investment Opportunities:
Investment opportunities can encompass a wide range of options, and they often depend on your
financial goals, risk tolerance, and investment horizon. Here are some common investment
opportunities and asset classes to consider:
1. **Stocks:** Investing in individual company stocks allows you to become a shareholder and
potentially benefit from capital appreciation and dividends. You can choose from various sectors
and industries.
2. **Bonds:** Bonds are fixed-income securities that offer periodic interest payments and return
of principal at maturity. They are considered lower risk compared to stocks and can provide
steady income.
3. **Mutual Funds:** Mutual funds pool money from multiple investors to invest in a
diversified portfolio of stocks, bonds, or other securities. They are managed by professional fund
managers.
4. **Exchange-Traded Funds (ETFs):** ETFs are similar to mutual funds but trade on stock
exchanges like individual stocks. They offer diversification and can track various market indices.
5. **Real Estate:** Real estate investment involves purchasing properties for rental income or
capital appreciation. You can invest directly in properties or through real estate investment trusts
(REITs).
6. **Cryptocurrencies:** Digital currencies like Bitcoin and Ethereum have gained popularity as
speculative investments. They are highly volatile and carry unique risks.
7. **Commodities:** Investing in commodities like gold, silver, oil, or agricultural products can
serve as a hedge against inflation and diversify your portfolio.
8. **Startups and Venture Capital:** Investing in early-stage startups and emerging companies
can potentially yield high returns, but it comes with higher risk. This is often done through
venture capital or angel investing.
9. **Retirement Accounts:** Consider contributing to tax-advantaged retirement accounts like
401(k)s, IRAs, or Roth IRAs, which offer various investment options and tax benefits.
130. **Collectibles and Art:** Some individuals invest in collectible items, such as rare coins,
stamps, or art, with the hope that their value will appreciate over time.
11. **Dividend Stocks:** Focus on stocks of companies with a history of paying dividends.
These can provide a steady stream of income in addition to potential capital gains.
12. **Savings Accounts and Certificates of Deposit (CDs):** While lower-risk, these options
offer a safe place to park your money and earn some interest.
13. **Impact Investing:** Consider investments that align with your values and social or
environmental goals, such as sustainable or socially responsible funds.
14. **International Investments:** Diversify your portfolio by investing in international markets
through international stocks, bonds, or ETFs.
15. **Options and Derivatives:** These are more complex and speculative investment
opportunities that involve contracts based on the future price of an underlying asset.
Before investing in any opportunity, it's crucial to conduct thorough research, assess your risk
tolerance, and consider your investment goals. Diversifying your investments across various
asset classes can help manage risk, and consulting with a financial advisor can provide valuable
guidance in making investment decisions. Additionally, always consider your financial situation,
time horizon, and the level of due diligence required for each investment opportunity.
1.5 Investment Process:
The investment process involves a series of steps that individuals or institutions follow to make
informed decisions about allocating capital to various assets or investment opportunities. It's
essential to have a systematic approach to manage risk and achieve financial goals. Here is a
general outline of the investment process:
1. **Set Clear Investment Goals:**
- Determine your financial objectives, such as saving for retirement, buying a home, or funding
education.
- Establish a timeline for achieving these goals.
 - Define your risk tolerance, which reflects your willingness and ability to withstand
fluctuations in the value of your investments.
2. **Create an Investment Plan:**
- Develop an investment strategy that aligns with your goals and risk tolerance.
- Decide how much capital you can invest and how much you'll allocate to different asset
classes (e.g., stocks, bonds, real estate).
- Consider diversification to spread risk across various investments.
3. **Conduct Research and Analysis:**
- Research the asset classes and specific investments you are considering.
- Analyze factors like historical performance, potential returns, risks, and market conditions.
- Consider both qualitative and quantitative factors, such as company fundamentals, market
trends, and economic indicators.
4. **Select Investment Vehicles:**
- Choose the specific investment vehicles or assets that fit your strategy and goals.
- Examples include individual stocks, bonds, mutual funds, ETFs, real estate properties, or
other alternatives.
5. **Implement Your Strategy:**
- Open brokerage accounts or investment accounts if needed.
- Purchase the selected investments according to your asset allocation and investment plan.
- Consider factors like transaction costs, tax implications, and timing.
6. **Monitor and Review:**
- Regularly review your investment portfolio to ensure it remains aligned with your goals and
risk tolerance.
- Monitor the performance of your investments and the overall market conditions.
- Make adjustments as necessary, which may involve rebalancing your portfolio or making
strategic changes.
7. **Risk Management:**
- Continuously assess and manage risks associated with your investments.
- Consider strategies like diversification, setting stop-loss orders, or using hedging techniques
if appropriate.
8. **Stay Informed:**
 - Stay informed about economic developments, market news, and changes in the investment
landscape.
- Keep up with the performance of your investments and any changes in the companies or
assets you've invested in.
9. **Tax Planning:**
- Be aware of the tax implications of your investments and implement tax-efficient strategies to
minimize tax liabilities.
10. **Long-Term Perspective:**
- Maintain a long-term perspective and avoid making impulsive decisions based on short-term
market fluctuations.
- Remember that investments can be subject to volatility, and patience can be a key factor in
achieving your financial goals.
11. **Seek Professional Advice:**
- Consider consulting with a financial advisor or investment professional for guidance and
advice, especially if you have complex financial goals or a significant portfolio.
The investment process is iterative, meaning that you may need to revisit and adjust your plan
periodically as your financial situation, goals, and market conditions change. A well-thought-out
investment process can help you make informed decisions, manage risk, and work toward your
long-term financial objectives.
1.6 Risk and Return:
Risk and return are fundamental concepts in finance that are closely intertwined and play a
crucial role in investment decision-making. Here's an explanation of each concept and how they
are related:
**1. Risk:**
Risk in investing refers to the uncertainty or variability of potential returns from an investment.
In simpler terms, it's the chance that you may not achieve the expected or desired outcome from
your investment. Various factors contribute to investment risk, including:
- **Market Risk:** The risk that the overall market will decline, affecting all investments, due to
factors such as economic downturns or geopolitical events.
- **Asset-Specific Risk:** Also known as idiosyncratic risk, this is the risk that is unique to a
particular investment or asset, such as the risk of a company-specific event like a product recall.
- **Interest Rate Risk:** The risk that changes in interest rates will affect the value of fixed-
income investments like bonds. When interest rates rise, bond prices typically fall, and vice
versa.
- **Liquidity Risk:** The risk that you may not be able to buy or sell an asset quickly at a
desired price due to limited market liquidity.
- **Credit Risk:** The risk that a borrower, such as a corporation or government, may not fulfill
its financial obligations, resulting in a loss for bondholders.
- **Political and Regulatory Risk:** The risk that changes in government policies, regulations,
or political instability can impact investments.
- **Currency Risk:** The risk that fluctuations in exchange rates can affect the value of
investments denominated in foreign currencies.
- **Volatility Risk:** The risk associated with price fluctuations in an investment. High-
volatility investments can experience significant price swings.
**2. Return:**
Return in investing refers to the gain or loss made on an investment over a specific period. It is
typically expressed as a percentage of the original investment or the amount of money earned or
lost. Returns can come from various sources:
- **Capital Gains:** Profit from selling an investment for a higher price than the purchase price.
- **Dividends or Interest:** Income received from investments like stocks (dividends) or bonds
(interest payments).
- **Rental Income:** Income generated from real estate investments.
- **Other Sources:** Returns can also come from sources like royalties, business profits, or the
sale of collectibles.
**The Relationship Between Risk and Return:**
The relationship between risk and return is often summarized by the principle of the risk-return
trade-off. It states that, in general, higher potential returns are associated with higher levels of
risk, and lower risk investments tend to offer more modest returns. Here are some key points to
understand:
- **Higher-Risk Investments:** Investments with greater potential for returns are typically
riskier. For example, stocks have the potential for higher returns than bonds, but they also come
with higher volatility and market risk.
- **Lower-Risk Investments:** Lower-risk investments, like Treasury bonds or certificates of
deposit (CDs), are considered safer but offer relatively lower returns.
- **Investor Preferences:** An individual's risk tolerance and investment goals play a significant
role in determining their preferred balance between risk and return. Some investors are willing to
accept higher risk for the potential of higher returns, while others prioritize safety and stability.
- **Diversification:** Diversifying a portfolio by investing in a mix of asset classes can help
manage risk while seeking to achieve a reasonable level of return. Diversification spreads risk
across different types of investments.
It's important to note that the relationship between risk and return is not linear or guaranteed.
While riskier investments may offer the potential for higher returns, they also come with a
greater chance of loss. Moreover, past performance is not indicative of future results, so investors
must carefully assess their risk tolerance and conduct due diligence when making investment
decisions.
1.7 Measures of Return:
https://analystprep.com/cfa-level-1-exam/quantitative-methods/measures-of-return-2/
1.8 Sources of Risk:
Investing always carries a degree of risk, and understanding the various sources of risk is
essential for making informed investment decisions. Here are some key sources of risk in
investment:
1. **Market Risk (Systematic Risk)**:
- **Market Volatility**: The overall market can experience price fluctuations due to economic,
geopolitical, or macroeconomic factors. This affects the prices of most securities.
- **Interest Rate Risk**: Changes in interest rates can impact the prices of bonds, stocks, and
other investments. Rising interest rates can lead to falling bond prices, for example.
2. **Company-Specific Risk (Unsystematic Risk)**:
- **Business Risk**: This risk is associated with the specific operations and industry of a
company. Factors like competition, changes in consumer preferences, or management decisions
can affect a company's performance.
- **Financial Risk**: Companies may have financial issues, such as high debt levels or poor
financial management, that can affect their ability to generate returns for investors.
- **Liquidity Risk**: Some investments may be less liquid, meaning it can be challenging to
buy or sell them without affecting their price. This can lead to liquidity risk if you need to sell
quickly.
3. **Credit Risk**:
- **Default Risk**: When investing in bonds or loans, there's a risk that the issuer (e.g., a
corporation or government) may default on interest payments or principal repayment. This is
especially relevant for lower-rated bonds or those from financially unstable issuers.
4. **Political and Regulatory Risk**:
 - **Government Policies**: Changes in government policies, regulations, or tax laws can
impact investments. For example, new regulations might affect the pharmaceutical or energy
sectors.
- **Geopolitical Events**: Conflicts, trade tensions, or political instability in different parts of
the world can disrupt markets and affect investments.
5. **Currency Risk (Exchange Rate Risk)**:
- **Foreign Investments**: If you invest in assets denominated in foreign currencies,
fluctuations in exchange rates can affect the value of your investments when converted to your
home currency.
6. **Inflation Risk**:
- **Purchasing Power**: Over time, inflation erodes the purchasing power of money. If your
investments don't outpace inflation, you may actually lose real value.
Understanding these sources of risk is essential for portfolio diversification and risk
management. Different investments carry different levels and types of risk, so building a well-
balanced and diversified portfolio can help mitigate some of these risks and provide more stable
returns over the long term. Additionally, risk tolerance and investment goals should guide
investment decisions to ensure they align with an individual's or organization's financial
objectives.
1.9 Measuring Risk:
https://www.investopedia.com/terms/r/riskmeasures.asp#:~:text=The%20five%20measures
%20include%20alpha,investment%20holds%20the%20most%20risk.
1.10 Risk Premium:
https://www.financestrategists.com/wealth-management/investment-risk/risk-premium/
#calculating-risk-premiums
1.11 Stock Market Indices
Stock market indices, often referred to simply as "indices," are statistical measures that represent
the performance of a group of publicly traded companies' stocks. These indices provide a
snapshot of the overall health and performance of a specific segment of the stock market, an
entire market, or even a global collection of markets. Stock market indices are used for various
purposes, including benchmarking, tracking market trends, and assessing the performance of
investment portfolios. Here are some of the most well-known stock market indices from around
the world:
1. **Dow Jones Industrial Average (DJIA)**:
- **Location**: United States
 - **Description**: The DJIA is one of the oldest and most widely followed stock market
indices in the world. It represents the performance of 30 large, publicly traded companies listed
on the New York Stock Exchange (NYSE) and the Nasdaq.
- **Significance**: The DJIA is often viewed as an indicator of the overall health of the U.S.
stock market and the broader economy.
2. **S&P 500**:
- **Location**: United States
- **Description**: The S&P 500 is a broader and more diverse index than the DJIA, as it
tracks the performance of 500 of the largest companies listed on U.S. stock exchanges.
- **Significance**: The S&P 500 is considered a key benchmark for U.S. equities and is
widely used as a measure of the U.S. stock market's performance.
3. **Nasdaq Composite**:
- **Location**: United States
- **Description**: The Nasdaq Composite Index includes all the companies listed on the
Nasdaq stock exchange, which is known for its technology and internet-related companies. It is
more tech-focused than other U.S. indices.
- **Significance**: The Nasdaq Composite is often used to track the performance of
technology and growth stocks.
4. **SENSEX**:
- **Location**: India
- **Description**: The SENSEX, or BSE SENSEX (S&P BSE SENSEX), represents the 30
largest and most actively traded companies on the Bombay Stock Exchange (BSE).
- **Significance**: It is a key benchmark for the Indian stock market and is closely followed
by investors.
5. NIFTY 50:
Description: NIFTY 50, also known as the National Stock Exchange Fifty, is the flagship index
of the National Stock Exchange of India (NSE). It comprises the 50 largest and most liquid
stocks listed on the NSE.
Significance: NIFTY 50 is one of the most popular and widely tracked indices in India. It
provides a comprehensive view of the Indian stock market's performance.
These are just a few examples of stock market indices from different regions of the world. There
are numerous other indices that focus on specific sectors, industries, or investment themes,
catering to the diverse needs of investors and traders. These indices serve as important tools for
understanding and analyzing the performance of various segments of the global stock markets.
1.11 Beta Estimation
https://www.investopedia.com/terms/b/beta.asp

UNIT 2 FUNDAMENTAL ANALYSIS

Fundamental Analysis
https://www.5paisa.com/finschool/course/fundamental-analysis-beginners-module/introduction-
to-fundamental-analysis/
Technical Analysis
https://www.wintwealth.com/blog/technical-analysis-definition-importance-benefits-tools/
https://accountlearning.com/technical-analysis-the-essential-tools-and-techniques-history-and-
role-of-psychology-in-trading/
UNIT 3 BOND AND EQUITY VALUATION
Bond Valuation
https://www.investopedia.com/terms/b/bond-valuation.asp
Equity Valuation
https://corporatefinanceinstitute.com/resources/valuation/equity-valuation/
Bond yield theory
https://www.youtube.com/watch?v=jXtiqqiYOUk
Dividend Discount Model
https://www.investopedia.com/terms/d/ddm.asp
P/E Model
https://corporatefinanceinstitute.com/resources/valuation/price-earnings-ratio/
Relative Valuation Ratios
https://www.investopedia.com/articles/stocks/11/relative-valuation-stocks-valuing-stocks.asp
Efficient Market Theory
https://www.financestrategists.com/wealth-management/macroeconomics/efficient-market-
theory/
UNIT 4 PORTFOLIO RETURN AND RISK
Portfolio Return and Risk
https://thismatter.com/money/investments/portfolios.htm
Modern Portfolio theory
https://corporatefinanceinstitute.com/resources/career-map/sell-side/capital-markets/modern-
portfolio-theory-mpt/
Efficient Portfolio
https://corporatefinanceinstitute.com/resources/career-map/sell-side/capital-markets/efficient-
frontier/#:~:text=A%20portfolio%20is%20said%20to,investor's%20degree%20of%20risk
%20tolerance.
Portfolio Selcetion:
Portfolio selection refers to the process of combining different assets in a way that optimizes the
return and risk profile of an investment portfolio. Investors aim to construct a well-diversified
portfolio that maximizes returns for a given level of risk or minimizes risk for a targeted level of
return. Here are some key concepts and considerations in portfolio selection:
### 1. **Diversification:**
- Diversification involves spreading investments across different asset classes (stocks, bonds,
real estate, etc.) and geographic regions to reduce risk.
- The goal is to avoid over-concentration in a single asset or asset class, as different assets may
respond differently to market conditions.
### 2. **Risk and Return:**
- There is typically a trade-off between risk and return. Higher potential returns usually come
with higher levels of risk.
- Investors need to define their risk tolerance and investment objectives to determine an
appropriate balance between risk and return.
### 3. **Asset Allocation:**
- Asset allocation involves deciding how to distribute investments among different asset
classes. This is a critical decision that greatly influences portfolio performance.
- Common asset classes include stocks, bonds, cash, and alternative investments.
### 4. **Investment Strategy:**
- Investors can adopt different strategies, such as value investing, growth investing, or income
investing, based on their financial goals and risk tolerance.
 - The chosen strategy should align with the investor's investment horizon and objectives.
### 5. **Rebalancing:**
- Market fluctuations can cause the asset allocation of a portfolio to deviate from its original
plan. Regularly rebalancing involves adjusting the portfolio back to its target allocation.
- Rebalancing can help control risk and maintain the desired risk-return profile.
### 6. **Risk Management:**
- Understanding and managing various types of risk, including market risk, credit risk, and
liquidity risk, is crucial.
- Diversification, asset allocation, and careful selection of individual securities can contribute
to effective risk management.
### 7. **Due Diligence:**
- Thoroughly researching and analyzing individual assets before including them in a portfolio
is essential.
- Fundamental analysis, technical analysis, and consideration of macroeconomic factors are
common approaches to assess the attractiveness of investments.
### 8. **Monitoring and Review:**
- Regularly monitoring the performance of the portfolio and reviewing the investment thesis
for each asset is important.
- Changes in market conditions, economic factors, or personal financial situations may
necessitate adjustments to the portfolio.
### 9. **Financial Goals and Time Horizon:**
- Investors should align their portfolio with their financial goals (e.g., retirement, education
funding) and time horizon.
- The investment horizon can influence the level of risk an investor can afford to take.
### 10. **Tax Considerations:**
- Tax implications should be taken into account, and strategies to minimize taxes, such as tax-
efficient investing or tax-loss harvesting, can be incorporated.
In summary, portfolio selection is a dynamic process that requires a thoughtful approach
considering an investor's risk tolerance, financial goals, time horizon, and market conditions.
Diversification, asset allocation, and ongoing monitoring are key components of successful
portfolio management. Additionally, seeking professional financial advice can be beneficial in
constructing a well-rounded investment portfolio tailored to individual needs and circumstances.
Capital Market Theory:
https://www.scribd.com/presentation/320739214/Capital-Market-Theory
Capital Market line:
https://www.investopedia.com/terms/c/cml.asp
Market Portfolio:
https://www.investopedia.com/terms/m/market-portfolio.asp#:~:text=A%20market%20portfolio
%20is%20a,the%20market%20as%20a%20whole.
CAPM
https://www.investopedia.com/terms/m/market-portfolio.asp#:~:text=A%20market%20portfolio
%20is%20a,the%20market%20as%20a%20whole.
Security Market Line
https://corporatefinanceinstitute.com/resources/career-map/sell-side/capital-markets/security-
market-line-sml/
Arbitrage Pricing Theory
https://corporatefinanceinstitute.com/resources/wealth-management/arbitrage-pricing-theory-apt/
Single Index Model
https://www.wallstreetmojo.com/single-index-model/
UNIT 5 Portfolio’s Performance Evaluation
Portfolio’s Performance Evaluation
https://www.investopedia.com/articles/08/performance-measure.asp
Portfolio Revision
https://www.managementstudyguide.com/portfolio-revision.htm