INVESTMENT ANALYSIS &

PORTFOLIO
MANAGEMENT
DR. DOA NAQVI
ASSISTANT PROFESSOR
DEPT. OF BUSINESS ADMINISTRATION
KHWAJA MOINUDDIN CHISHTI
LANGUAGE UNIVERSITY
COURSE OUTLINE
⚫ This course provides a broad overview of investment management,
focusing on the application of finance theory to the issue faced by
portfolio managers and investors in general.
⚫ Topics will include the topics of equity investment, and fixed income
investment in various markets in the case of individual securities and
issues related to portfolio optimization and performance evaluation.
⚫ This also deals with the risk management instruments used to
manage the risk in equity market. It provides the extensive idea
about the mutual fund investment and develops general portfolio
management tools which are applicable when managing portfolios
with any of all asset classes.
UNIT 1
⚫ An Introduction to Investment
⚫ Nature and scope of investment decision,
Investment & speculation, Type of investment,
Investment Opportunities, Investment Avenues,
Risk & Return, Trade off; Investment Analysis,
Investment process, Relevance of Investment
Analysis.
WHAT DOES THE TERM
‘INVESTMENT’ MEAN?
⚫ Investment can be defined as commitment of
funds that is expected to generate additional
money. It may also be described as a
mechanism into which funds are placed with
expectation of higher returns than inflation.
⚫ (i) There is a commitment of funds (Savings)
⚫ (ii) There is an expectation of higher earnings
than inflation rate.
⚫ (iii) There is always some risk involved in
respect of return and the amount invested.
WHAT IS THE DIFFERENCE BETWEEN
SPECULATION & INVESTMENT?

⚫ In speculation, investment is made with an

expectation of some return in the form of
capital profit resulting from the price change
and sale of investment.
⚫ It is relatively short term investment. An
investor has a relatively longer planning
horizon. His holding period is usually at least
one year and he is not willing to assume
more than moderate risk. But in case of
speculation, the risk level is high.
WHAT IS THE DIFFERENCE BETWEEN
GAMBLING & INVESTMENT?

⚫ The result of gambling is known more quickly.

For example, the outcome of a roll of dice is
known almost immediately which is not
possible in case of speculation and
investment.
⚫ The objective behind gambling is fun not
income. But in case of both investment and
speculation, the motive is to earn income and
quick gains respectively.
PROCESS OF INVESTMENT
⚫ Setting the amount of investible wealth along with
investment objectives
⚫ Analysis of different investment alternatives according to
needs of investors
⚫ Constructing a portfolio of investment and determining
the amount to be invested in each one
⚫ Periodic repetition of the above three steps to improve
portfolio performance in view of changing market
conditions
ELEMENTS OF INVESTMENT

TAX
RISK RETURN
SHELTER

CONVENIENCE MARKETABILITY
ELEMENTS OF INVESTMENT
RISK
⚫ The risk of an investment refers to the
variability of its rate of return: that is how
much individual outcome deviates from the
expected value.
⚫ For example, if an investor expects to earn
18% return but he actually earns 15%, then it
means he has failed to minimize his risk. This
risk can be minimized be formulating
portfolios.
ELEMENTS OF INVESTMENT
RETURN
⚫ A return may be from yield such as dividend,
interest or through capital appreciation. Capital
appreciation is the difference between the
purchase price and sale price of the investment.
The formula for calculation of rate of return is as
follows:
⚫ Return =

(Maturity value-Initial investment value)+ Dividend

Initial investment value
ELEMENTS OF INVESTMENT
⚫ For example Mr X purchased a share of tata
company for 100 rs in the year 2013-2014.
He received 10 Rs. Dividend each year and
finally sold the share for 105 Rs in 2014-15.

His return would be - ?

ELEMENTS OF INVESTMENT
MARKETABILITY
⚫ An investment would be termed highly
marketable or liquid if:
⚫ (a) It can be transacted quickly. In other words, it
should be readily convertible into cash.
⚫ (b) The transaction cost is low.
⚫ (c) The price change between two successive
transactions is negligible.
ELEMENTS OF INVESTMENT
⚫ TAX SHELTER
⚫ The investor plans his investment considering
his tax status as well as tax benefits provided
by some investments. Tax benefits can be of
following three kinds.
⚫ (a) Initial tax benefits
⚫ (b) Continuing tax benefit
⚫ (c) Terminal tax benefit:
ELEMENTS OF INVESTMENT
⚫ CONVENIENCE
⚫ It refers to the ease with which investment
can be made (readily) and looked after
(easily). The degree of convenience
associated with investments varies widely.
⚫ For example, investment in a saving bank account can be made
readily and it does not require any maintenance effort. But if
investment is to be made by purchasing a house, there may be
legal hassles and maintenance efforts are also required.
INVESTMENT
OPPORTUNITIES & AVENUES
EQUITY
⚫ Equity stock or equity shares represent an
ownership position and the equity
shareholders are the owners of the firm
having the voting power.
⚫ The equity shares enables the investors the
right to the earnings of the firm and also run
the risk of receiving nothing if earnings are
insufficient to cover the obligations of the
firm.
DEBENTURES
⚫ Investors look forward for secured returns on
a regular basis and such instruments are in
great demand.
⚫ One such option is the Non-Convertible
Debentures. A NCD is a fixed income debt
paper issued by a Company.
⚫ The issuer agrees to pay a fixed interest on
the investment.
DEBENTURES
⚫ The NCDs are for a long term generally
ranging from 5 to 15 years.
⚫ These instruments have to be normally rated
by the credit rating agencies.
⚫ A good rating indicates reasonable
assurance of safety and return of principal as
well as interest.
⚫ The risk element shall be high if the rating is
not so good
BONDS
⚫ Bonds refer to a long-term investment
avenue which has a specified amount or rate
of interest and specified maturity date.
⚫ It is a marketable legal contract that promises
to pay its investors a stated rate of interest
and to repay the principal at the maturity
date.
TYPES OF BONDS

GOVERNMENT BONDS

PRIVATE SECTOR BONDS

PSU BONDS

SAVINGS BONDS

INFRASTRUCTURE BONDS
GOVERNMENT BONDS
⚫ Government bonds are the tradable instrument issued
either by Central Government or State Government to
finance their activities.
⚫ The State Government issues these bonds as State
Development Loans (SDLs).
⚫ Bonds issued by municipalities and public institutions are
also deemed as Government bonds.
GOVERNMENT BONDS
⚫ Investors can choose this as an investment avenue,
which provides returns in terms of coupons.
⚫ These can be held in dematerialized form and has a very
secondary market, thereby providing high liquidity.
These instruments are fully free of default risk. However,
the returns earned thereof is relatively low.
SAVINGS BONDS
⚫ Savings bonds are the bonds issued by RBI, which are
available for investment at various banks, designated by
RBI.
⚫ These bonds have the feature of both cumulative and
non- cumulative interest payments.
⚫ Generally these bonds earn a coupon rate of interest at
8% per annum.
⚫ The minimum investment is Rs. 1,000 and in multiples of
Rs. 1,000 thereof.
⚫ Generally these bonds have a maturity period of 6 years.
PRIVATE SECTOR BONDS
⚫ Private sector bonds or corporate bonds are the means
by which the private firms borrow money directly from
the public.
⚫ The investors can invest in these bonds and they
generally pay semi-annual coupons over the entire term
of the bond and also return the face value to the
investor upon maturity.
⚫ These bonds carry a higher rate of interest over the
Government bonds, since the inherent default risk is
higher.
PRIVATE SECTOR BONDS
⚫ The private sector bonds include all listed debt securities
issued by institutions such as banks, bodies corporate
and companies.
⚫ In order to issue these bonds, they have to be credit
rated. The credit rating helps the investor to assess the
credit worthiness of the issuer and to decide accordingly.
PSU BONDS
⚫ PSU bonds are the bonds issued by Public Sector
Undertakings in which the government shareholding is
generally more than 51%, wherein these agencies tend
to channelize the credit to finance their needs.
⚫ These bonds provide an investment opportunity, wherein
the interest payments are made at pre-determined
intervals and the principal is repaid upon maturity. The
returns on these bonds are relatively higher that
Government bonds and lesser than corporate bonds.
INFRASTRUCTURE BONDS
⚫ Infrastructure bonds are long-term bonds notified by the
Central Government which are eligible for a deduction
under section 80CCF.
⚫ Only the bonds issued by IFCI, LIC, IDFC, NBFCs which
are classified as ‘Infrastructure Finance Companies’ by
the RBI are eligible for the aforesaid deduction.
⚫ The investor may invest in these bonds, but have a
minimum tenure of 10 years and a lock-in period of 5
years.
INFRASTRUCTURE BONDS
⚫ After the lock-in period of 5 years, the investor may, exit
in the secondary market. The investment in these bonds
up to Rs. 20,000 is eligible for deduction u/s 80 CCF.
⚫ However, the deduction u/s 80 CCF is disallowed with
effect from FY 2012-13. Yet, this remains as one of the
investment avenue for a long-term horizon.
DIFFERENCE BETWEEN
BONDS AND DEBENTURES
DIFFERENCE BETWEEN
BONDS AND DEBENTURES
MONEY MARKET
⚫ As per the Reserve Bank of India, the term ‘Money
Market’ is used to define a market where short-term
financial assets with a maturity up to one year are
traded.
⚫ The assets are a close substitute for money and support
money exchange carried out in the primary and
secondary market. In other words, the money market is a
mechanism which facilitate the lending and borrowing of
instruments which are generally for a duration of less
than a year.
MONEY MARKET
⚫ High liquidity and short maturity are typical
features which are traded in the money market.
The non-banking finance corporations (NBFCs),
commercial banks, and acceptance houses are
the components which make up the money
market.
⚫ Money market is a part of a larger financial
market which consists of numerous smaller sub-
markets like bill market, acceptance market, call
money market, etc.
MONEY MARKET
⚫ Besides, the money market deals are not out
in money / cash, but other instruments like
trade bills, government papers, promissory
notes, etc.
⚫ But, the money market transactions can’t be
done through brokers as they have to be
carried out via mediums like formal
documentation, oral or written
communication.
MONEY MARKET
INSTRUMENTS
⚫ Money market instruments are the
investment avenues which have high liquidity
and short- term maturity, generally less than
a year.
⚫ These instruments provide an opportunity for
the investor to park his/her money for a short-
term varying from few days to few weeks to
few months.
Objectives of Money Market
Instruments
⚫ The money markets not only help in the storage of short-
term surplus funds but also help in lowering short term
deficits.
⚫ Money market assists the short-term fund users to fulfil
their needs at a very reasonable rate.
⚫ It helps in the development of capital market and trade
and industry.
⚫ Money markets help in designing effective monetary
policies.
⚫ It also facilitates in streamlined functioning of commercial
banks.
TYPES OF MONEY MARKET
INSTRUMENTS

TREASURY BILLS

CERTIFICATE OF DEPOSITS

COMMERCIAL PAPERS

LIQUID BEES
TREASURY BILLS
⚫ Treasury bills are an investment vehicle available for the
investors who can invest for a period of less than a year.
⚫ These are issued by Government of India and currently
three variants of treasury bills are issued, namely, 91-
day treasury bills, 182-day treasury bills and 364-day
treasury bills.
⚫ The subscriptions can be made for a minimum of 10,000
and in multiples of 10,000
CERTIFICATES OF DEPOSIT
⚫ Commercial deposits are short-term instruments issued
by schedule banks, having a maturity ranging from 7
days to a year.
⚫ CDs are issued in denomination of 1,00,000 and in
multiples of 1,00,000, thereon. The interest rate on
these are market driven.
⚫ Commercial deposits are like bank term deposits, except
for the fact that they are freely negotiable and
transferable.
COMMERCIAL PAPERS
⚫ Commercial papers are another investment vehicle in
money-market asset class. These are short-term
monetary funds, issued by large corporations. They are
not backed by any form of collaterals and hence are
unsecured. The corporations issuing these papers must
be compulsorily credit rated.
⚫ The value of these papers are in denominations of
5,00,000 and in multiples thereof. The maturity period of
these papers, range between 7 days and a year.
LIQUID BEES
⚫ Liquid Bees is a peculiar investment vehicle which are
listed and traded on a recognized stock exchange,
wherein the investment is made in a basket of money-
market instruments like call-money, short-term
government securities or treasury bills, commercial
paper, certificate of deposits and other money-market
instruments of short maturities.
LIQUID BEES
⚫ Safety and liquidity are the two most important factors
considered in Liquid Bees. The unique feature of Liquid
Bees is that the price risk would be minimized. These
need to be credit rated and can be traded only in
electronic mode (demat).
⚫ Liquid Bees is the alternate mode for managing cash-in-
hand for the short-term, instead of it lying idle in the
bank. The income received from these investments is
exempt from tax.
Non Marketable Financial
Assets
⚫ A significant portion of the investment in
financial assets by an individual or a
household is parked in non-marketable
financial assets such as, bank deposits, post-
office deposits, PPF, NSC, etc.
⚫ The unique feature of these assets is that
there is a prevalence of personal relationship
between the investor and the issuer.
Non Marketable Financial
Assets
⚫ This personal transaction touch makes the
investor comfortable and moreover these
investments are quite safe.
⚫ Though these investments cannot be traded,
it ensures high degree of safety and
reasonable liquidity.
⚫ The purpose of these assets is to provide a
good savings plan to individuals for future
purposes or a regular stream of income.
 Bank deposits

Flexi Deposits

Post office deposits (POTD)

Monthly income scheme of the post office

Non Marketable (MISPO)
Financial Assets
National Savings Certificate (NSC)

Company Deposits

Employees Provident Fund Scheme (EPF)

Public Provident Fund (PPF)

 Bank deposits
⚫ Bank deposits are most popular and the
simplest investment avenue for an individual
investors, where he opens an account with a
bank and parks his money.
 Types of Bank Deposits

Bank
Deposits

Savings Fixed Current Recurring

deposits deposits deposits deposits
Bank deposits
⚫ The current a/c deposits do not earn any
interest, while the other three deposits earn
interest on the deposited amount that is
payable by the bank to the depositor.
⚫ Fixed deposits are the popular scheme for
investment purpose available for households
and individual investors, where safety is
assured.
Bank deposits
⚫ The deposit of a certain amount is made for a
fixed period at the pre-determined market
rate of interest.
⚫ The interest is payable on a periodic basis
and also reinvestment of interest type of fixed
deposits are available.
⚫ At the end of fixed period, the amount with
accrued interest is paid back to the depositor.
Bank deposits
⚫ Recurring deposits are also quite popular
means of investment by the households,
where the depositor makes periodical
investment for a fixed duration.
⚫ This enables the individual investor to build a
corpus amount with small deposits on a
regular basis.
Bank Deposits
⚫ Recurring deposits are very popular among
salaried class, especially for those who can
save few hundreds to few thousands per
month.
⚫ This scheme is quite useful to people who
cannot afford to have a large amount of
savings and thus cannot use fixed deposit
scheme of the bank.
Bank deposits
⚫ The depositor deposits the amount
periodically, generally every month, and the
banks promise to pay the interest at the pre-
determined rates on these deposits.
⚫ Upon maturity, the investor is paid the
maturity value, which denotes principal
coupled with interest accrued.
Flexi deposits
⚫ Flexi deposits are unique type of savings
deposit account, which is a blend the
characteristics of both savings account and
the fixed deposit account.
⚫ In this deposit scheme, the balance in excess
of a stipulated amount is automatically
converted to fixed deposit for a default term
of one year.
Flexi deposits
⚫ This is a savings-cum-fixed deposit account,
where the cash limit of the savings deposit is
fixed and the balance of the idle cash in the
savings account is converted into earning
mode of fixed deposits.
⚫ These flexi deposits provide the liquidity
associated with the savings deposit as well
as the higher returns by investing the surplus
cash into fixed deposits.
Post office deposits (POTD)
⚫ The post office time deposit (TD) in a post
office is almost similar to a bank fixed deposit
but one can deposit only for 1 year, 2 year, 3
year and 5 years.
⚫ The deposit made for 5-year duration
qualifies for the Section 80C tax benefit.
⚫ The interest earned is fully taxable and to be
added to one’s ‘Income from other sources’
as in the case of bank FD.
Post office deposits (POTD)
⚫ There is complete safety as the entire
amount in post office time deposit is backed
by a government guarantee.
⚫ Even the interest rate is higher than bank FD
in most cases.
⚫ However, there is no monthly, half-yearly or
quarterly interest payout options, hence PO
time deposits may not suit those who need
regular income
Monthly income scheme of
the post office (MISPO)
⚫ One of the most popular investment avenue
among rural investors and not that well-
known amongst urban population.
⚫ It is the scheme where there is a defined
return on the investment.
⚫ The interest is calculated on a yearly basis,
but payable every month.
⚫ The interest is payable from the date of
making the investment and not from the start
of the month. The maturity period is five
Monthly income scheme of
the post office (MISPO)
⚫ The interest is payable from the date of making the
investment and not from the start of the month. The
maturity period is five years.
⚫ The minimum amount eligible for investment is 1,500
and the maximum amount is 4,50,000 in case of
individuals and 9,00,000 in case of joint account holders.
⚫ The drawback of this scheme is that this investment is
not eligible for deduction u/s 80C, which explain the fact
that it is not popular amongst urban investors.
National Savings Certificate
(NSC)
⚫ National Savings Certificate is another
opportunity for investors, wherein, they can keep
their money invested for a slightly long period
and want this amount to compound.
⚫ The investment in NSC is eligible for deduction
u/s 80C. However, the interest earned thereon is
taxable.
⚫ This is an excellent avenue for those who want
to stay invested and allow the investment to
grow over a period of time.
National Savings Certificate
(NSC)
⚫ NSCs are available in the denominations of
100, 500, 1000, 5,000 and 10,000.
⚫ This scheme is best suitable to government
employees, businessmen and other salaried
class, who are income tax assessees.
⚫ The tenure of NSC is also 5 years but unlike
bank FD and PO Time Deposit, there is no
option to get regular interest payout, not even
annual payments
COMPANY DEPOSITS
⚫ Company deposits are very similar to bank
fixed deposits that are made by the investors
with Financial Institutions and NBFCs for a
fixed period at a pre-determined fixed rate of
interest.
⚫ The interest paid on these deposits is
relatively higher than the bank deposits, since
there is a higher degree of risk associated.
COMPANY DEPOSITS
⚫ The risks associated with these company
deposits are credit risk and interest rate risk.
⚫ Although, there is a higher risk involved, the
investors are motivated to invest in these
instruments due to higher returns earned
thereof.
Employees Provident Fund
Scheme (EPF)
⚫ Employee Provident Fund is a prominent
platform of savings in India amongst the
organized workforce.
⚫ Employee Provident Fund Scheme is an
investment avenue, wherein, the employees
from both the private sectors and public
sectors can invest a portion of their salary
every month and build a corpus for future.
Employees Provident Fund
Scheme (EPF)
⚫ Generally, the contribution is made by both
the employee and the employer. The
contribution made by the employee is eligible
for deduction u/s 80C of Indian Income Tax
Act of 1961.
⚫ Interest is paid on amount deposited and it is
accumulated with the fund. The fund gets
built and the investor can use it for his
retirement of future plans.
Public Provident Fund Scheme
(PPF)
⚫ Public Provident Fund is a long-term debt
scheme of Government of India, wherein, any
individual in India can invest in this scheme
and can earn a decent tax-free return on the
same.
⚫ The interest rate on PPF is generally slightly
higher than that of interest rates offered by
Bank Fixed Deposits.
Public Provident Fund Scheme
(PPF)
⚫ PPF account can be opened in any post
office or designated bank branches. The PPF
investors prefer to maintain their PPF
account with banks rather than Post office,
since banks facilitate online transfer of funds
and online deposits.
⚫ The minimum amount to be deposited in a
PPF account is 500 and the maximum is
1,00,000 per annum.
Public Provident Fund Scheme
(PPF)
⚫ There is also a lock-in-period of initial five
years.
⚫ Investment in PPF is eligible for deduction u/s
80C of Income Tax Act of 1961 and also, the
tax earned thereon is tax-free.
Real Estate
⚫ Real estate is one of the most sought after
investments, which the investors are excited
about. The rapid rise in real estate prices is very
attractive and the investor looks forward this as
both an investment avenue and a basic shelter
to live in.
⚫ India’s large market, favorable demographics,
higher disposable income and rising domestic
demand are key ingredients for the growth in
real estate sector in India.
TYPES OF REAL ESTATE
INVESTMENTS

Residential House

Commercial Property

Agricultural Land

Suburban Land
PRECIOUS OBJECTS
⚫ Precious objects are those items that are generally
small in size, but highly valuable in monetary terms.
⚫ These are normal physical product or metals that
are used as traditional store of wealth.
⚫ The most important precious objects are gold, silver,
precious stones and art objects.
⚫ There is an increased use of precious objects as an
investment vehicle, since the returns from these are
quite outstanding, where as the risks are
comparatively lower.
INSURANCE POLICIES
⚫ Insurance is a legal agreement between two
parties i.e. the insurance company (insurer)
and the individual (insured).
⚫ In this, the insurance company promises to
make good the losses of the insured on
happening of the insured contingency.
INSURANCE POLICIES
⚫ The contingency is the event which causes a
loss.
⚫ It can be the death of the policyholder or
damage/destruction of the property.
⚫ It’s called a contingency because there’s an
uncertainty regarding happening of the event.
⚫ The insured pays a premium in return for the
promise made by the insurer.
Mutual Funds
⚫ Mutual Fund refers to the trust that pools the
savings of investors and forms a common
fund.
⚫ The fund thus created is then invested in
financial market instruments like shares,
debentures and other securities which also
include government securities.
Mutual Funds
⚫ The income earned through
these investments and the capital
appreciation realized are shared among the
unit holders in proportion of the units held by
them.
⚫ Investments in securities are spread over a
wide cross- section of industries and sectors,
thus allowing risk reduction to take place.
Mutual Funds
⚫ Diversification reduces the risk because all
stocks and instruments may not move in the
same direction and in the same proportion
and at the same time.
 POOL OF FUNDS
CREATED BY
COLLECTING SAVINGS
FROM INVESTORS
 POOL OF FUNDS
CREATED BY
COLLECTING SAVINGS
FROM INVESTORS
invested in financial market instruments
like shares, debentures and other
securities
The income earned through
these investments and the capital
appreciation realized are shared among
the unit holders in proportion of the units
held by them.
WHAT IS RISK?
WHAT IS RISK?
⚫ The variability of the actual return from the
expected returns associated with the given
asset is defined as a risk.
⚫ The greater variability is associated with the
risky securities like equity shares and the
more certainty of return is associated with the
government securities like Treasury-Bills
have lesser variability and thus are less risky.
WHAT IS RISK?
⚫ Risks on investment like bank deposit are
considered to be quite safe, but rate of
interest can change depending on the policy
of RBI.
⚫ Investments in equity securities of a firm
possess higher degree of risk as compared to
govt securities and bank deposits as they are
surrounded by market risk, which is quite
uncontrollable because they are broad
spectrum depending on market forces.
WHAT IS RISK?
⚫ An investor has to take a decision in investing
the firm’s funds in such a way to optimize
return along with minimization of risk. This
combination is called the risk return trade-
off.
⚫ This is the level where the market price of
the share is maximized. The balance brought
about by matching risk and return help in
achieving the objectives of wealth
maximization.
RISK V/S RETURN TRADE-OFF
TYPES OF RISK
⚫ Systematic risk ⚫ Unsystematic risk
⚫ Due to the broad ⚫ Unsystematic risk is a
spectrum of unique risk related to
uncontrollable risk the company
associated with the pertaining to the
business activities behaviour pattern or
within a country. internal influence of a
firm
TYPES OF RISK
⚫ Systematic risk ⚫ Unsystematic risk
⚫ It generates out of ⚫ It generates out of factors
macroeconomic related to company’s
environmental factors internal environment such
such as demand, supply, as problems relating to
inflation, change in management, staff,
interest rates, and expenses, losses, strikes
change in government and other issues directly
policies backed by affect the company’s own
sociological and political operations.
factors in a country.
TYPES OF RISK
⚫ Systematic risk ⚫ Unsystematic risk
⚫ It is an uncontrollable risk ⚫ These are controllable
as these forces are risks and thus can be
beyond the control of any minimized by
individual and thus diversification of
cannot be minimized by a investment portfolio.
single firm. They have
their strong influence on
the market conditions.
⚫ Such risks are called market
risk and interest risk and
purchasing power risk.
RELEVANCE OF
INVESTMENT ANALYSIS
⚫ Individuals as well as institutions are
increasingly making investments now a days.
⚫ The capital markets are also growing and it is
evident by the fact that the number of mutual
funds, private players in insurance sector,
real estate investment etc all are increasing
regularly.
RELEVANCE OF INVESTMENT
ANALYSIS
⚫ Even the interest of small investors is increasing day by
day.
⚫ They are investing their money through mutual fund
portfolios.
⚫ Institutions also invest their employees’ provident fund
money and their idle funds. Sometimes, corporate
houses face short-term liquidity issues and for this they
park their funds in money market instruments generally.
So, now a day, study of investment is becoming more
and more relevant.
RELEVANCE OF INVESTMENT
ANALYSIS
⚫ A careful and systematic investment helps
investors to earn better returns in relation to the
risk assumed. Investment analysis can provide a
sound framework for both the management of
wealth and increasing the wealth.
⚫ It also helps the investor to find suggestion to
some or all of the following issues --
RELEVANCE OF INVESTMENT
ANALYSIS
⚫ (i) The types of financial assets available in the
market.
⚫ (ii) The risk and return relationship of these
financial assets.
⚫ (iii) The difference between rate of return and
yield.
⚫ (iv) The use of diversification to reduce risk.
⚫ (v) The use of fundamental and technical
analysis in taking financial decisions.
⚫ (vi) Selection of mutual funds for investment.
RELEVANCE OF INVESTMENT
ANALYSIS
⚫ (iv) The use of diversification to reduce risk.
⚫ (v) The use of fundamental and technical
analysis in taking financial decisions.
⚫ (vi) Selection of mutual funds for investment.