SAPM

SAPM

SAPM

• Security Tradable

Financial Value

• Classification of Securities
• Debt Securities - IOU
• Equity Securities - Ownership
• Derivatives- Derives value

Security Analysis

• Analysis of - tradable financial instrument
• To determine the value of assets in a portfolio
• Effect of market fluctuations

Forms of Investment

Types of Investment

Portfolio Management

Real Assets

Financial Assets

• Gold, Silver, Platinum, Diamonds, real estate , antiques etc

Non Financial Instruments

• Real Estate
• Gold

Portfolio Management

(PM) guides the investor in a method of selecting the best available securities that will provide the expected rate of return for any given degree of risk and also to mitigate (reduce) the risks.

Portfolio

• is a group of financial assets such as shares, stocks, bonds, debt instruments, mutual funds, cash equivalents, etc. A portfolio is planned to stabilize the risk and maximize returns

Non- Securtized

Invesments

Securtized

Investments

Financial Instruments

• Equities
• Mutual Funds
• Bonds
• Deposits
• Cash Equivalents- Treasury bills and money market funds are cash equivalents.

• Equity shares
• Prefernce shares
• Debentures
• Government bonds
• Units of UTI
• Mutual Funds

• Not quoted in the stock exchnage and is freely marketable
• Eg- Bank deposits,corporate deposits, post office deposits, NSC

Factors influencing investment decision

• Post market trends
• Investment Horizon-How long can you keep the money invested?
• Risk appetite
• Investment surplus-How much money are you able to keep aside for investments?
• Investment need -How much money do you need at the time of maturity?
• Expected Returns

Return

Risk

• The variability of returns from those that are expected.
• Personal Risk
• Timing Risk
• Tenure Risk
• Financial Risk
• Liquidity Risk
• Interest Rate Risk

• Numerical measure of a investments performance
• Return is the principal reward in the investment process, and it provides the basis to investors in comparing alternative investments.
• Average Annual Return Calculation
• X = ΣX

n

• Historical Return Calculation

Calculate Return

Year Rt

2002 15%

2003 20%

2004 9%

2005 10%

2006 5%

Pe- Price at the end of the year

Pb- Price at the beginning of the year

Calculate total return on this stock