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Security Analysis & Portfolio Management

This document discusses investment concepts including the meaning, definition, objectives, and types of investment. It also discusses security analysis and its objectives. The key points are: 1) Investment involves committing funds today with the goal of generating income or appreciation in the future. The essential element is an expectation of a return. 2) Objectives of investment include maximizing returns, minimizing risk, and hedging against inflation. 3) Security analysis involves projecting future earnings/dividends of a security and estimating its intrinsic value to determine investment decisions. The objectives are evaluating risk and return characteristics.

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Vignesh Prabhu
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791 views45 pages

Security Analysis & Portfolio Management

This document discusses investment concepts including the meaning, definition, objectives, and types of investment. It also discusses security analysis and its objectives. The key points are: 1) Investment involves committing funds today with the goal of generating income or appreciation in the future. The essential element is an expectation of a return. 2) Objectives of investment include maximizing returns, minimizing risk, and hedging against inflation. 3) Security analysis involves projecting future earnings/dividends of a security and estimating its intrinsic value to determine investment decisions. The objectives are evaluating risk and return characteristics.

Uploaded by

Vignesh Prabhu
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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SECURITY ANALYSIS &

PORTFOLIO MANAGEMENT
Session-1 ( Investment)
• Learning objectives:
• Meaning of Investment
• Definition of Investment
• Objectives of Investment
• Risk & return relationship
• Types of Investment
• Securities
• Security Analysis & Its
Objectives
Meaning of Investment

• Investment is putting money into something


with the expectation that it will generate
income or the value will appreciate in future or
profit.
Definition of Investment
• “Commitment of funds made in the expectation
of some positive rate of return”

• Investment is the employment of funds with the


aim of achieving additional income or growth in
value.

• Expectation of return is an essential element of


investment.
Meaning of Investment

• It involves the commitment of resources


which have been saved or put away
from current consumption in the hope
some benefits will accrue in future.

• Investment involves long term commitment


of funds and waiting for a reward in the
future.
Meaning of Investment

Financial Meaning:
Investment is the commitment of a person’s
funds to derive future income in the form of
interest,dividend,premiums,pension or
appreciation in the value of their capital.
Meaning of Investment

Economic meaning:
• Net additions to the economy’s capital stock
which consists of goods and services that are
used in the production of other goods and
services.
Financial Meaning of
Investment
• Financial investment involves of funds
in various assets, such as Stock, Bond,
Real Estate, Mortgages etc.
Features of Investment
• Safety of Principal Amount
• Liquidity & Marketability
• Income Stability
• Purchase power stability with price level
inflation
• Adequate Cash Returns
• Growing Rate of Capital formation
• Legal Ownership
• Appreciation of Investments
• Ready Transferability of Investments
Objectives of
investment
• 1.Maximisation of return
• 2.Minimisation of risk
• 3.Hedge against inflation
• 4.Safety
INVESTMENT PROCESS

Portfolio Portfolio
Investment Valuation
Analysis Construction Evaluation
policy

- Diversifi
- Investible cation
-Intrinsic - -
fund - Market -Appraisal
Value
- Objectives - -Industry Selection -Revision
-Future
- Knowledge - Company &
Value
Allocatio
n
Investment Vs
Speculation
Investment Vs
Speculation
What is Security
Various types of securities are traded in the market.
Broadly securities represent evidence to property right.
Commonly we think of securities as shares and bonds.
According to securities Contracts Regulation act 1956 ,
securities include
shares,scrips,stocks,bonds,debentures or other
marketable like securities of any incorporated company
or other body corporate or government.
Security analysis
Security analysis, in both traditional sense and modern
sense, involves the projections of future dividend or
earnings flows ,forecast of the share prices in the future
and estimating the intrinsic value of a security based on
the forecast of earnings or dividends. In short security
analysis in traditional sense is essentially an Analysis of
the fundamental value of a share and its forecast for
the future through the calculation of its intrinsic worth
of the share.
Objectives of Security Analysis

•Rate of return from Securities


• Variability of rate of return
•Marketability of Security
•Tax Shelter
•Convenience
What causes Risk ?
Wrong decisions of what to invest
Wrong timings of investments
Nature of the Investments
Credit worthiness of the Issuer
Maturity period or the Length of investment
Amount of Investment
Methods of Investment
Terms of Lending
Nature of the Industry
National & International factors
Financial
markets

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