CC3152_L08_ch11 - INVESTMENT PLANNING CC3152 Principles of Financial Planning(I The Objectives Rewards Of Investing[LG1 Investingusually considered

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CC3152 Principles of Financial Planning ˟˘˖˧˨˥˘ʳˋ INVESTMENT PLANNING
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5-2 (I) The Objectives & Rewards Of Investing [LG1] ! Investing —usually considered a long- term activity. Future values and returns expected to increase through time. ! Speculating —usually considered a short-term activity. Future values and returns highly uncertain. ! Investment prerequisites —adequate insurance coverage and cash/savings (emergency fund) to provide protection against the unexpected
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5-3 Coming Up With the Capital ! Determine your financial objective. ! How much money will it take? ! Do you have a lump sum to invest now, or will you systematically save toward your goal? ! Your investment plan provides direction in helping you attain your goal
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5-4 What Are Your Investment Objectives? ! Supplement current income appropriate for retired persons. ! Save for major expenditures such as college education, down payment on a home, or starting a business. ! Save for retirement to live comfortably in your "golden years."
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5-5 1. Common Stock Represents a share of ownership in a company. Greater potential returns, but at a higher level of risk. 2. Bonds Represent the debt of a company. Provide current income. Lower level of risk than stocks, but with lower expected returns as well. Bond valuations inversely related to changes in prevailing interest rates. Different Ways to Invest
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3. Preferred Stock An equity security that behaves like debt— provides current income and possible price appreciation. However, company has no legal obligation to declare dividends. Convertible Bonds Usually offer lower interest rates than regular bonds, but — Can be converted into common stock. Risk that common stock will not do well and
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This note was uploaded on 03/17/2009 for the course AF 3152 taught by Professor Peggy during the Spring '09 term at Hong Kong Polytechnic University.

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CC3152_L08_ch11 - INVESTMENT PLANNING CC3152 Principles of Financial Planning(I The Objectives Rewards Of Investing[LG1 Investingusually considered

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