Chapter no :1

Profits are better than wages. Good is enemy of great. MAN M= The person who has money A= The person who has authority to use N= The person who is also needy Descon is the only multinational company of Pakistan in the world. Investment The current commitment of funds against some return. Risk Chance of loss, or probability of loss. OR The chance that actual investment returns will differ from those expected Higher the risk higher will be the profit Speculation The purchase of the high risk investment vehicle that offer high uncertain return and future value. Classification of long term Long term = 2 to 40 years Short term = less than 1 year Short term investment:Investment that typically mature within one year. Long term investment:Investment with maturities of longer than a year or with no maturity at all. Domestic investment:Debt, equity, and derivative securities of U.S based companies.

Foreign based investment:Debt, equity, and derivative securities of foreign based companies. Common stock:Equity investment that represents ownership in a corporation; each share represent a fractional ownership interest in the firm. Preferred Stock:Ownership interest in a corporation; has a stated divided rate, payment of which is given preferences over common stock dividend of the same firm. Step in investment: The following overview of the steps in investing provides a framework for the concepts, tool and techniques presented throughout the book. Step1: Meeting investment prerequisites: Before investing, you must make certain that you have adequately provided for the necessities of life. This includes funds for housing, food, transportation, taxes and clothing. In addition, you should have a pool of easily accessible funds for meeting emergency cash needs. Step2: Establishing Investment Goals: Once you have satisfied the Prerequisites, the next step is to establish investment goals. Investment goals are the financial objective you wish to achieve by investing. Clearly, your investment goals will determine the type of investments you will make. Step3: Adopting And investing Plan: Once you have established your general goals you should adopt an investment plan. A written document describing how you will invest funds. You can develop a series of supporting investment goal for each long term goal. For each goal, specify the target date for achieving it & the amount of tolerable risk. The more specific you can be in your statement of investment goals, the easier it will be to establish an investment plan consistent with your goal. Step4: evaluating investment vehicles: Next you will want to evaluate investment vehicles by assessing each vehicle's potential return & risk. Step5: Selecting suitable investments: You now gather additional information & use it to select specific investment vehicles consistent with your goals. You must assess factors such as expected return, risk & tax considerations. Careful selection of investment vehicles is essential to successful investing.

Step6: constructing a diversified Portfolio: To achieve your investment goals, you will assemble an investment portfolio of suitable investment. You will use diversification, to improve the profit and to reduce the risk of loss, because if you face loss from one investment you can cover this loss from the other investment. Diversification is the financial term for age-old advice, "Don't put all of your eggs in one basket". Step 7: Managing your portfolio Once you have constructed your portfolio, you should measure its actual behavior in relation to expected performance. If the investment result are not consist with your objectives, you may need to take corrective action.

Types of income
The income of individuals is classified into one of three basic categories Active income Active income consists of everything from wages and salaries to bonuses, tips, pension income, and alimony. Active income is made up of income earned on the job as well as most other forms of noninvestment income. Portfolio income Portfolio income is earning generated from various types of investment. This category covers most (but not all) types of investment, from saving accounts, stocks, bonds, and mutual funds to options and futures. For the most parts, portfolio income consist of interest, dividends, and capital gains (the profit on the sale of an investment).

Investing over the life cycle

htworG-oriented Youth(age 20 to 45) Middle age consolidation (age 45 to 60) emownIoriented retirement years (age 60 to ?)

Chapter no 2
Money market:Where demander and supplier come together to meet their short term financial needs.

OR Market where short term securities (with maturities less than one year) are bought and sold. Capital market:Where demander and supplier come together to meet their long term financial needs. OR Market in which long term securities (with maturities greater than in year) such as stock and bonds are bought and sold. Primary market:Where companies issue shares/stock at initial level. OR The market in which new issue of securities are sold to the public. Secondary Market:The market in which securities are traded after they have been issued ; an aftermarket. OTC over the counter:Other than stock market when stocks and shares are bought or sold on some other place is called OTC. OR A segment of the secondary market that involves trading in smaller, unlisted securities. Broker Market:Where brokerage houses facilitate to buy and sell stocks other than stock exchange or in stock exchange is called broker Market. OR The securities exchange on which the two sides of a transaction, the buyer and the seller, bought together to trade securities.

Dealer Market :Where dealers execute orders to buy and seller share on behalf of investors. OR

The market in which the buyer and seller are not brought together directly but instead have their orders executed by dealers that make markets in the give security. Bull market:Favorable markets normally associated with rising prices, investor optimum, and government stimulus. Bear Market:Unfavorable market normally associated with falling prices, investor pessimism, economic slowdown, and government restraint.

How securities are traded

IPO Initial public offering:Process of issuing shares in primary market is called IPO. OR The first public sale of a company's stock. Public Offering:When stocks are offered to sell the share to general public for the sale of share is called offering. OR The sale of the firm's securities to the general public. Right offering:Share issued by the public limited company to existing shareholder is called right offering. OR An offer of new shares of stock to existing stockholders on a prorate bases. Private placement:Shares issued to the general public but issued to the some certain person or organization for mutual benefit. OR The sale of new securities directly, without SEC registration, to selected groups of investors. Investment banker:-

The bank through which shares are issued to the general public is called investment banker. Self registration:Shares are ready to sell in your shelf approved by the SECP. SECP:Securities & exchange commission of Pakistan. Prospectus:An invitation to general public to buy shares. Red herring:The prospectus available for selling of shares before regular advertisement. Underwriting:Under writing is a process to bear the risk against selling of shares. Underwriting syndicates ad associates of persons which is developed to share risk of issuing share. Specialist:Stock exchange member who specializes in making transactions in one or more stocks and manages the auction process. Bid price:Maximum purchase price offered by the buyer. OR The highest price offered to purchase a security. Ask price:The lowest price at which a security is offered for sale. OR Maximum share price offered to sell. ECN:- (Electronic Communication Network) The network which facilitate in all three exchanges is called electronic communication network.