INVESTMENT ANALYSISINVESTMENT ANALYSIS&&

PORTFOLIO MANAGEMENTPORTFOLIO MANAGEMENT

Lecture # 1

Dr. Shahid A. ZiaShahid A. Zia

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The Course

• INVESTMENT

• ANALYSIS

• PORTFOLIO

• MANAGEMENT

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Text book

• PRACTICAL INVESTMENT MANAGEMENT, 3rd Edition, (Southwestern/Thomson)

• Robert A. Strong• ISBN 0-324-17164-1• INVESTMENT ANALYSIS and MANAGEMENT,

9th EDITION, (by Charles P. Jones)

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Assets

Financial Assets Real Assets e.g. bond, stock e.g. land

Assets are things that people own.

Investment Alternatives

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There are three broad categories of securities.

Securities

EquitySecurities

e.g. common stock

Derivative Assets

e.g. futures, options

Fixed IncomeSecurities

e.g. bonds,preferred stock

Investment Alternatives

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Why invest ???

Three Reasons for Investing

People invest to … • supplement their income

– Dividends and Interest.

• earn capital gains– Appreciation refers to an increase in the value

of an investment.

• experience the excitement of the investment process.

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To consume, to save, or to invest a rupee that is earned ?

Both saving and investing amount to consumption shifting through time.

Investing

However, saving involves little, if any, risk, while investing is a risky endeavor.

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Fundamental Analysis

Fundamental Analysis include the evaluation of the;

• Balance Sheet• Annual Report• Profit & Loss Figures• Profitability Ratios• Liquidity Ratios• Operational Ratios

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Technical Analysis

Focus on the movement of the share prices going up or going down.

Scenario Analysis

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Investments

Investment means to invest something in some where.

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Uses of Investments

Three uses of investments;

1. Consumption

2. Savings

3. Investing

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Investing

You consume less than you save and then from saving you can always think about investment.

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Savings

It is very important to see that how you save the money.

• You save money in your home at secure place.

• Committees.

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Channels of Savings

• Banking

• Non-financial institutions

• National saving schemes

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Portfolio Management

How to manage different sectoral things.

“Don’t Keep all your eggs in one basket”

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Investment Analysis and Portfolio Management

Mutual fund are also used in the portfolio.

• Collection of eggs.

• Collection of different shares, cash and foreign exchange.

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Bonds

• Term Finance Certificates

• Bearer bonds

• Fixed Income bonds

• Euro bonds