HUZAIFA-UR-REHMAN

SUBJECT: INVESTMENT ANALYSIS & PORTFOLIO MANAGEMENT

8TH SEMESTER

BBA

DATE: 11/4/2020

INVESTMENT ANALYSIS & PORTFOLIO

MANAGEMENT
Investment analysis and portfolio management is that the field that covers completely different
investment selections and management of pool of various appropriate investments within the
sort of portfolio. There square measure variety of various investment alternatives and everyone
has its own options. during this space investment choices square measure analyzed and
evaluated on the premise of their potential to get effective revenue for extended amount of
your time. In recent world risk is common part that's gift virtually in each investment.
In order to eliminate that risk issue, bound technique is employed that is said as portfolio within
which completely different varieties of unrelated investments square measure pool along in
single set. This portfolio is then properly managed as an entire. By creating investment analysis,
an acceptable set of portfolios of various investments is formed then managed as whole to get
effective overall come back by minimizing the chance issue related to these investment choices.

WHAT IS INVESTMENT
An economist says that once an individual earns a green back, he has 2 choices. Either he can
consume it or reserve it. If the person decides to consume that greenback then he consumes it
in automotive, food or consumer goods etc. On the opposite hand if he decides to avoid
wasting it then he can place that greenback aside and consume it at some later date.
Here is evident distinction between saving & investment. just in case of saving, cash is
overpassed in nearly risk-less less choice like golf stroke cash in bank saving account. The
person is aware of beforehand his future returns and also the deposited cash is insured by the
Federal Deposit Insurance Corporation (FDIC). but there are a unit few worries concerned in
brief run saving.
Investment on the opposite hand is golf stroke cash in a very risky choice. By getting shares of
company listed in big apple exchange is taken into account as investment. If the capitalist
permits the broker to stay his shares and send accounting each month then this type of
investment is protected against loss, stealing and brokerage failure by the Securities capitalist
Protection Corporation (SIPC). however, the investment in such case isn't secured against fall
within the worth. once AN capitalist invests in stocks of specific company then he can ought to
worry regarding his investment in several aspects.
Investment and saving is said with shifting of consumption over time. The person holding
possessed greenback isn't payment it in current day, however can pay it later in assumption
that he has endowed or saved it showing wisdom.

Investment Alternatives:
Assets:
The things that area unit in hand by individuals re observed as assets. Assets area unit of 2 sorts
that area unit
Financial Assets
Real Assets
There is corresponding liability carried by monetary assets somewhere. On the opposite hand
there's no corresponding liability related to the important assets however it is created to
finance real assets.
Securities:
Security is Another reasonably investment different that is within the style of papers that
represents a possession. In past years securities area unit solely related to the monetary assets
like shares and bonds. however, in current years these also are be joined with real assets. The
conversion of AN assets or cluster of assets in additional marketable kind is finished through a
method known as securitization.

Kinds of Securities:
Securities are classified within the following 3 classes.
 Equity Security
 Fixed financial gain Security
 Derivative Assets
Equity Security:
The most outstanding security within the equity class is that the ordinary shares. The
possession interest within the company is described by stock. The dividend financial gain is paid
from the earnings of company in equity securities but it's not the legal obligation of the
corporate to pay dividends. largely firms pay dividends on regular basis and take a look at to
keep up consistent growth in dividends payments.
Fixed financial gain Securities:

A fastened financial gain security has outlined money flows that are fixed forever. the foremost
vital fastened financial gain securities are bonds. Bond is legal paper that represents Associate
in Nursing obligation to repay principal quantity of loan still as interest thereon. These interests’
payments & principal quantity are fastened and no more quantity is obligatory. the value of
borrowing cash is described by the interest. the popular stock is assessed by bourgeois as
equity security however its characteristics are additional like fastened financial gain security.
largely stock pays regular dividend that's fastened forever. so, these are thought-about as
fastened financial gain security by the investment manager.

On the opposite hand a set rate is paid by the debt security of bond certificate. The bond holder
of bond certificate has right to convert his bond into the common stocks of the corporate.
however, if the conditions of conversion feature don't seem to be potential enough at specific
moment, then the bonds are merely bonds & categorized as fastened financial gain security. On
the opposite hand if the costs are redoubled then the bond is reborn into ordinary shares &
thought-about as equity security.
The main purpose to recollect is that each one issued stock doesn’t seem to be sure as shooting
categories as equity security and equally all issued bonds don't seem to be for good categorized
as fastened financial gain security. Their class is confirmed by their investment characteristics.

Derivative Assets
In 1990’s by-product assets become standard within the investment community. there's no
universal definition of by-product quality. In easy terms the worth of by-product quality springs
from the worth of different another} underlying quality or relationship between varied other
assets.
The most acquainted sorts of by-product assets are futures and choices. the majority massive
investment homes and business banks use these building blocks of risk management of as
investment choices.
Reasons of Investment
There are a unit 3 reasons for creating investments that area unit

 Income
 Appreciation
 Excitement

Income
One massive reason for investment is to supplement the financial gain. individuals invest in
stocks & bonds of various corporations that offer them financial gain within the form of
dividends and interest payments.

Appreciation:
Another reason for creating investment is appreciation within the variety of capital gains. There
are a unit bound people that area unit at smart monetary stage and don't need financial gain
within the form of dividends however rather they have growth in their investments. the rise
within the price of Associate in Nursing investment is brought up as appreciation.

Excitement:

In bound cases somebody has hobby to form investments. Investment is truly suggests that to
Associate in Nursing finish instead of being Associate in Nursing finish in itself. The improved
monetary standing is that the final objective of Associate in Nursing investment. If Associate in
Nursing capitalist makes several trades, however solely at the breakeven purpose within the
method, then the fabric good thing about of these trades is gained solely by the broker.