Advantages 

of Financial Investment
Financial investments are right now the most mainstream investment vehicle
and give a few favorable circumstances to speculators, including the
accompanying:

Advanced Portfolio Management

one need to pay an administration expense as a major aspect of the expense

proportion, which is utilized to employ an expert portfolio supervisor who guides
you in purchasing and offering stocks, bonds, and so forth. This is a generally
little cost to pay for help in the administration of an investment portfolio.

Dividend Reinvestment

As profits and other premium wage is pronounced for the reserve, it can be
utilized to purchase extra offers in the common store, in this manner helping
your investment develop.

Risk Reduction (Safety)

A decreased portfolio hazard is accomplished through the utilization

of diversification, as most shared assets will put resources into somewhere in
the range of 50 to 200 distinct securities – relying upon their core interest. A
few record stock common finances claim at least 1,000 individual stock
positions.

Convenience and Fair Pricing

Shared assets are normal and simple to purchase. They ordinarily have less or
low least investments (some around $2,500) and they are exchanged just once
every day at the closing net resource value (NAV). This dispenses with value
change for the duration of the day and different arbitrage openings that
informal investors hone.

Odds of Good Returns in Short Time

Indeed, even in the past individuals have increased great profits for their
securities exchange investments, and they generally have a decent opportunity
to acquire enormous benefits when one choose to put resources into securities
exchange. In this way, when you put resources into securities exchange India,
in spite of the fact that you put yourself at a ton of dangers, you are likewise in
a position to acquire great returns in a brief timeframe.

Minority Ownership

All things considered, it sounds like a misrepresentation, yet when one put
his/her cash in a rumored organization’s stocks, one moves toward becoming
turned into a section proprietor of the organization, regardless of however littler
offer they have.  One can enhance remaining in the market by placing cash in
various organizations. In addition, you can exit at whatever point you need to.

Disadvantages of Financial Investment

1. High Expense Ratios and Sales Charges
if you’re not paying attention to mutual fund expense ratios and sales
charges; they can get out of hand. Be very careful when investing in
funds with expense ratios higher than 1.20%, as they will be
considered on the higher cost end. Be wary of 12b-1advertising fees
and sales charges in general. There are several good fund companies
out there that have no sales charges. Fees reduce overall investment
returns.
2. Management Abuses
churning, turnover and window dressing may happen if your manager
is abusing his or her authority. This includes unnecessary trading,
 excessive replacement and selling the losers prior to quarter-end to fix
the books.
3. Tax Inefficiency
Like it or not, investors do not have any choice when it comes to
capital gain payouts in mutual funds. Due to the turnover,
redemptions, gains and losses in security holdings throughout the year,
investors typically receive distributions from the fund that are an
uncontrollable tax event.
4. Poor Trade Execution
if you place your mutual fund trade anytime before the cut-off time for
same-day NAV, you’ll get the same closing price NAV is for buy or sell
on the mutual fund. For investors searching for faster execution times,
maybe because of short investment horizons, day trading, or timing
the market, mutual funds provide a weak execution strategy.
5. Volatile Investments
Investment in BSE is subjected to many risks since the market is
volatile. The shares of a company fluctuate so many times in just a
single day. These price fluctuations are unpredictable most of the times
and the investor sometimes have to face severe loss due to such
uncertainty.
6. Brokerage Commissions Kill Profit Margin
Every time an investor purchase or sells his shares; he has to pay
some amount as a brokerage commission to the broker, which kills the
profit margin.
7. Time Consuming
Investment in NSE is not as easy as investing in a lottery as you have
to complete many formalities in the process and hence is time
consuming..
Advantages & Disadvantages
of Commercial Paper
Commercial paper is also known as short-term paper because of the brief length
of its term. To be considered short term, a debt instrument must mature in nine
months or less. Commercial paper can take several different forms, including
promissory notes, U.S. Treasury bills and certificates of deposit. Market analysis
agencies such as Standard and Poors rate each instrument of commercial paper
based on the financial strength of the issuing company, and there are
advantages and disadvantages to both issuing it and investing in it.

Liquidity
Government agencies and large companies often use commercial paper to fill in
gaps in their cash flow. Private companies may issue short-term debt instruments
to cover the time between performing work for a major client and receiving
payment. This reduces the need to keep large cash reserves on hand to pay for
future costs that can be reasonably estimated. Since the organization's cash flow
needs are satisfied, it is free to devote more resources to long-term expansion
projects.

Return on Investment
Commercial paper offers a return on investment for buyers without requiring a
long-term commitment. This makes it a viable option for institutional investors
such as mutual funds and retirement plans that may not be able to tie up their
funds for a long period of time. The rate of return for a particular investment
depends on the type of debt instrument and the terms set by the issuing
company.

Financial Problems for the Issuing Company

Commercial paper does have some disadvantages that must be taken into
consideration when a company is deciding whether to issue more debt. Because
of the short time frame, the company must be sure of its ability to repay the debt
on the maturity date. If it runs into unexpected financial problems and cannot
cover its debts, the market may react poorly and cause the situation to snowball.
The company will have even more trouble paying off its debts in the future once it
is considered too risky for new investors.

Risk to Investors
Financial struggles on the part of the issuing company also have adverse effects
on investors in commercial paper. Potential buyers should look carefully at the
security's rating before investing any money. Defaults on highly rated commercial
paper are rare due to the stability of the companies issuing the instruments. The
main risk to investors in financially healthy companies is the possibility that the
company will stop rolling over the commercial paper program and new debt
instruments will not be available in the future.
Advantages of commercial papers:

1) It is quick and cost effective way of raising working capital.

2) Best way to the company to take the advantage of short term interest fluctuations in the
market

3) It provides the exit option to the investors to quit the investment.

4) They are cheaper than a bank loan.

5) As commercial papers are required to be rated, good rating reduces the cost of capital for the
company.

6) It is unsecured and thus does not create any liens on assets of the company.

7) It has a wide range of maturity

8) It is exempt from federal SEC and State securities registration requirements.

Disadvantages of commercial papers:

1) It is available only to a few selected blue chip and profitable companies.

2) By issuing commercial paper, the credit available from the banks may get reduced.

3) Issue of commercial paper is very closely regulated by the RBI guidelines.

ADVANTAGES OF COMMERCIAL PAPERS

1. One benefit of commercial papers is that, it is a cost effective way of

financing working capital.
2. The cost of commercial papers to the issuing firm is lower than the cost of
securing a commercial bank loans.
3. As commercial papers are required to be rated, good rating reduces the cost
of capital for the company.
4. Commercial papers produce a continual source of funds. This is because
their maturity can be tailored to suit the needs of issuing firm. Again,
commercial paper that matures can be repaid by selling the new commercial
paper.

DISADVANTAGES OF COMMERCIAL PAPERS

1. By issuing commercial papers, the credit available from banks may get
reduced.
2. Only financially secure and highly rated organizations can raise money
through commercial papers. New and moderately rated organizations are not
in a position to raise funds by this method.
3. If a firm is not in a position to redeem its paper due to financial difficulties,
extending the duration of commercial paper is not possible.

Advantages
 1. No collateral is needed.

2. Lower cost of funding.

3. Lesser documentation and compliance.

4. Highly liquid.

5. It allows the diversification of funds in short-term instruments.

6. High-rated instruments, hence fewer chances of default.

7. For investors, returns are higher as compared to bank deposits.

8. No restriction on the end-use of funds.

Disadvantages
1. Commercial paper can be issued by investment-grade banks and large

corporations only. Hence it is not a source of fund which is available to

all.

2. Small investors cannot directly invest in commercial paper.

3. The secondary market for commercial papers is less liquid.