Más contenido relacionado



  1. Investment Activities in Capital Markets Pham Van Hung
  2. The investment Process • 1, Set investment objectives and policy • 2, Perform security analysis • 3, Construct a portfolio • 4, Evaluation the performance of the portfolio • 5, Revise the portfolio
  3. Investment Objectives and Policy • Investment objectives should be stated in terms of both risk and return • This first step of the investment process concludes with identification of the potential categories of finacial assets for consideration in the ultimate portfolio. This identification will be based on the investment objectives, amount of investible wealth, tax status of investor.
  4. Securities analysis • Securities analysis involves examing a number of individual securities (or groups of securities) within the broad categories of finacial assets previously identified. • There are two approach of securities analysis: technical analysis and fundamental analysis.
  5. Portfolio Construction (PC) • PC involves identifying those specific assets in which to invest as well as determining the proportions of the investtor's wealth to put in each one. Here the issues of selectivity, timing, and diversification need to be addressed by the investor.
  6. Portfolio Performance Evaluation • Portfolio performance evaluation involves periodically determining how the portfolio performed in terms not only of the return earned but also the risk experenced by theinvestor. Thus, appropriate measures os return and risk as well as relevant standard are needed. The results obtained from this step may indicate whether or not portfolio revision is in order.
  7. Portfolio Resision Portfolio Resion concerns the periodic repetition of the previous four steps. That is, overtime the investor may change his/her investment objectives, which, in turn, means that the currently held portfolio may no longer be optimal. Thus, a new portfolio should be formed by selling some securities currently held and purchasing new ones.
  8. TYPES OF ORDERS • At the market order: • Limit order: • Stop order: • Limit stop order: • Other orders:
  9. Market orders • Orders that do not specify a price are treated as the market orders. • When placing a market order the investor can be fairly certain that the order will be executed but is uncertain of the price.
  10. Limit orders • Limit order is an order which a limit price is specified by the investor when the order is placed. If the order is to purchase shares, then the broker is to execute the order only at a price that is less than or equal to the limit price. If the order is to sell shares, the order is executed only at a price that is greater than or equal to the limit price. • An investor using a limit order may not be certain that the order will be executed.
  11. Stop order • It is a conditional market order. For a stop order, the investor must specify what is know as a stop price. If it is a sell order, the stop price must be below the market price at the time the order is placed; conversely, if it is a buy order, the stop price must be above the market price at the time the order is placed. If someone else later trades the stock at a price that reaches or passes the stop price, then the stop order becomes, in effect, a market order.
  12. Limit Stop Order • A limit stop order is a type of order that is designed to overcome the uncertainty of the execution price associated with a stop order. With a limit stop order the investor specifies not one but two price – a stop price and a limit price. What happens is that once someone trades the stock at a price that reaches or passes the stop price, then a limit order is created at the limit price. Hence, a limit stop order can be viewed as a conditional limit order.
  13. Other orders • Day order: the order will be filled only during the day in which it was entered. If the order is not filled by the end of the trading session, then it expires. • Open orders or good-till-cancelled order remain in effect until they are either filled or canceled by the investor. • Fill or kill orders are stipulating that if the order can only be partially completed, then any portion unfilled will be canceled. • All or none orders requires the trader to execute the total number of shares specified before it will be accepted.
  14. Call and continuous auction Call Auctions • In call auction, trading is allowed only at certain specified times. With this system, orders can be executed at the price that allows the maximum number of shares from accumulated orders to be traded. Continuous auction • Trades may occur at any time. • Since order from investors arrive more or less randomly, price in such a market would vary considerably, depending on the flow of buy orders relative to the flow of sell orders.
  15. Priority in order matching • Price • Time • Customer • Quantity
  16. Principles of order matching • 1: Executing price (EP) is a price that allows the maximum number of shares from accumulated orders to be traded. • 2: Purchasing price that higher than EP and selling price that lower than EP can be executed • 3: Distributing from lower amount to higher amount • 4: Priority to price that closer to last closing price. • 5; Priority to price that have lower spread between selling- buying accumulative amount.
  17. An example of auction
  18. Exercise
  19. Results
  20. Margin account • Margin account is an account that has overdraft privileges: when limits, if more money is needed than is in the account, a loan is automatically made by the broker. • When opening the margin account with a brokerage firm, an investor must sign a margin agreement. This agreement grants the brokerage firm the right to pledge the investor’s securities as collateral for bank loans, provided the securities were purchased using a margin account.
  21. Short sale • Short sale is the process that investor to “sell high, buy low”. The investor sells a security first and buys it back later. • Short sale is accomplished by borrowing shares for use in the initial trade and then repaying the loan with certificates obtained in the later trade.
  22. Fundamental and technical analysis Fundamental Analysis • Fundamental analysis entails searching for a s e c u r i t y i n w h i c h t h e financial analyst’s estimate of such things as the firm’s value, the future earning, the liquidity… Technical Analysis • Technical analysis is the study of the internal stock exchange information as such. The word “technical” implies a study of the market itself and not of those external factor which are reflected in the market… All the relevant factors can be reduced to the volume of stock transactions and the level of share price…
  23. Glossary • Asked price is the price at which a market maker is willing to sell a specified quantity of a particular security • Bid price is the price at which a market maker is willing to purchase a specified quantity of a particular security.