Saturday, July 29, 2017

Security Analysis and Portfolio Management (SAPM) concept Investment

In general investment means conversion of cash or money into a monitory asset or a claim on future money for a return investment is parking with once fund used by other party, use of fund for productive activity.
It means giving an advance of loan or contributing to equity (ownership capital) or debt capital of a corporate or non-corporate business units.
Invest has two features:
          1. Current sacrifice
          2. Future benefit
      A portfolio manager buys 10000/- shares of IT ltd.
      Your relative main have subtract to the 6 years post office monthly income scheme
      A corporation firm may spent 5 crores of rupees for expansion programs
      A middle aged man with a family
Factors determining the investment:
      Rate of growth of company
      Performance (quality of management) of the company
      Facilities available for liquidation
      Individual performance for investor
Characteristics of investment:
Risk: minimize the risk and maximize the return
Return: maximum the returns by surplus funds
Safety:
Liquidity:  immediately assets are converts into cash
Marketability :  whenever you want you sell.

Classification of investment:
                                                Saver
Financial assets                        investor                         physical assets
Cash at bank                           marketable                     land
Provident fund                        credit securities              building
LIC                                                                                gold , silver
Shares
Bands
Mutual funds
Capital market

Marketability                                                                 non-marketability

Primary market    secondary market       Buying & selling in share

Primary market purchase:
      Board of directors
      Associate (group of people)
      Employees
      Financial institution
      Foreign financial institution
      NRI’s (Non Resident of India)
Investment Vs speculation:
Speculation:
          Does not consider statistical calculations but the investor thinks there is a future benefit.
Investment Vs gambling:
          Gambling:   it is purely depended on luck for Ex: lottery, betting
Financial market:
Classification of financial marker:   financial markets are the centers or arrangements that provide facilities for buying and selling of financial claims and services. The participants in financial markets are corporations financial institutions and government
                                                Financial market

Capital market                                                               money market
Long term                                                                       (with in 1 year)
                                                                   Call money market
                                                                   Commercial bill market
                                                                   Commercial papers
                                                                   Certificates of deposit
Money market:    
          A market where short term funds are borrowed and lent is called money market. Money market deals in short term assets(period of maturity) on year or less.
Capital market:
          Capital market deals in the long term claims, securities and stock with a maturity period of more than one year
Primary marker:
          Primary market are those market which deals with in the new financial claims or new securities. It also known as new financial claims or new securities. It also know as new issue market. Primary markets are the markets for the firm of shares and debentures the firm get first capital in primary market.
Secondary market:
          Secondary markets are those markets which deal in securities already issued. The secondary market does   not contribute directly to the supply of additional capital.