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Understanding The Investment Landscape

The document provides an overview of investment concepts, emphasizing the importance of understanding risks and rewards in financial management. It outlines the investment process, including research, portfolio construction, and the evaluation of risks such as market and interest rate risks. Additionally, it distinguishes between systematic and unsystematic risks while discussing business and financial risks that can impact investment profitability.

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aviralgupta0506
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19 views6 pages

Understanding The Investment Landscape

The document provides an overview of investment concepts, emphasizing the importance of understanding risks and rewards in financial management. It outlines the investment process, including research, portfolio construction, and the evaluation of risks such as market and interest rate risks. Additionally, it distinguishes between systematic and unsystematic risks while discussing business and financial risks that can impact investment profitability.

Uploaded by

aviralgupta0506
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Understanding the

Investment Landscape
This presentation explores the essential concepts of investment,
from defining its core principles to navigating its inherent risks and
rewards. Join us as we demystify this crucial aspect of financial
management.
by Ishika Gupta
Navigating the Investment Process
Research and Planning Portfolio Construction Monitoring and Evaluation

Identify your investment goals and Diversify your investments across Regularly review your portfolio
risk tolerance. Analyze various different asset classes to manage performance and adjust your
investment options, including risk. Allocate funds based on your investment strategy as needed.
stocks, bonds, real estate, and financial goals and time horizon. Stay informed about market trends
mutual funds. and economic conditions.
Risk and Return: A
Fundamental Relationship
1 Higher risk generally 2 Risk-averse investors
leads to the potential for may prefer investments
higher returns. This is with lower potential
because investors returns but also lower
demand compensation risk. They prioritize
for taking on more risk. capital preservation over
aggressive growth.

3 The risk-return relationship is not always linear. Some


investments may offer relatively high returns with moderate
risk, while others may offer high returns with extreme risk.
Systematic vs.
Unsystematic Risk:
Unveiling Market Volatility

Systematic Risk Unsystematic Risk


Market-wide risks that affect all Risks specific to individual
investments, such as economic companies or industries, such
recessions, interest rate as poor management, product
changes, and geopolitical failures, or legal issues.
events.
Exploring Specific Risks
1 Market Risk
The risk that the overall market value of investments may
decline. This is influenced by factors such as economic
growth, inflation, and investor sentiment.

2 Interest Rate Risk


The risk that changes in interest rates will negatively
affect the value of fixed-income investments, such as
bonds. Rising interest rates can lower the value of existing
bonds.

3 Purchasing Power Risk


The risk that inflation will erode the purchasing power of
your investments over time. As inflation rises, the value of
your investments may decrease.
Business and Financial
Risk: A Deeper Dive
Business Risk Financial Risk
The risk that a company's The risk that a company
profitability may be affected may not be able to meet its
by factors such as financial obligations, such
competition, regulatory as debt payments or
changes, and technological interest payments.
advancements.

Measurement of Risk
Various tools and metrics are used to measure risk, including
standard deviation, beta, and Sharpe ratio.

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