Chap01 (1) - stocks, bonds, real estate , commodities and...

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1 Chapter 1: Overview
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2 Chapter 1: Overview Ch1: Overview of Investment Main Topics What is investment How to invest Is it easy to make money in financial markets
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3 Chapter 1: Overview What Is Investments Investment An investment is the current commitment of money or other resources in the expectation of reaping future benefits. Real Assets Investment Real assets (such as plants and machinery) are assets used to produce goods and services Financial Assets Investment Financial Assets are claims on real assets or the income generated by them
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4 Chapter 1: Overview Types of Financial Assets Fixed-income securities Securities pay a specified cash flow over a specific period. Equity An ownership share in a corporation Derivatives Securities providing payoffs that depend on the values of other assets.
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5 Chapter 1: Overview The Investment Process Asset allocation The choice among broad asset classes such as
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Unformatted text preview: stocks, bonds, real estate , commodities and so on Security selection The choice of which particular securities to hold within each asset class Top-down strategy vs. bottom-up strategy 6 Chapter 1: Overview Competitive market Risk-return trade off Assets with higher expected returns have greater risk Efficient markets Active management Finding underpriced securities Timing the market Passive management No attempt to find underpriced securities No attempt to timing the market Holding an efficient portfolio 7 Chapter 1: Overview Major Players in the Financial Markets Firms Households Government Financial intermediaries 8 Chapter 1: Overview Financial Intermediaries Investment companies Investment bankers Commercial Banks Insurance companies credit unions...
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Chap01 (1) - stocks, bonds, real estate , commodities and...

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