{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

ch21 - investment portfolio b Investment horizon i Planned...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Investment Analysis Chapter 21 Investors and the investment process I. Investors and Objectives a. Risk tolerance: willingness to accept risk b. Risk aversion: reluctance to accept risk c. Individual investors i. Human capital: education, the major asset most people have during their early working years is the earning power derived from their skills ii. Life cycle affects risk tolerance and aversion d. Professional investors i. Personal trusts 1. Established when an individual confers legal title to property to another person or institution, who then manages that property for one or more beneficiaries ii. Mutual funds iii. Pension funds e. Life insurance companies f. Non-life insurance companies g. Banks h. Endowment funds i. Held by organizations chartered to use their money for specific nonprofit purposes II. Investor constraints a. Liquidity i. Establish a minimum level of liquid assets they need in the
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: investment portfolio b. Investment horizon i. Planned liquidation date c. Regulations i. Prudent investor rule: the fiduciary responsibility of a professional investor; restrict investment to assets that would have been approved by a prudent investor d. Tax considerations i. After-tax returns e. Unique needs III. Investment policies a. First decision is asset allocation b. Second is security selection c. Top-Down policies for institutional investors i. Asset universe: approved list of assets in which a portfolio manager may invest ii. The investment company has responsibility for broad asset allocation d. Active vs. passive policies IV.Monitoring and revising investment portfolios a. Dynamic process: continually updating and reevaluating decisions over time...
View Full Document

{[ snackBarMessage ]}