1. INVESTMENT
Sijo James
MBA – Finance
MACFAST

2. Definition
• It is the employment of funds on assets with
the aim of earning income or capital
appreciation.
• And it is the net additions to the capital stock
of society.
• Financial investment is the allocation of
money to assets that are expected to yield
some gain over a period of time.

3. Speculation
• It means taking up a business risk in the hope
of getting short term gain.
• Speculation essentially involves buying and
selling activities with the expectation of
getting profit from the price fluctuations.

4. Investment objectives.
1 Return : Always expect a good rate of return
from the investment.
• R = End period value-Beginning period
value + Dividend/ Beginning period value*
100
2 Risk : Risk of holding securities is related with
the probability of actual return becoming less
than the expected return.

5. 3 Liquidity : Marketability of the investment
provides liquidity to the investment.
• It depends up on the marketing and trading
facility.
4 Hedge against inflation : The return rate
should be higher than the rate of inflation.

6. 5 Safety : The selected investment avenue
should be under the legal and regulatory
frame work.

7. Investment process
 Framing of investment policy.
 Investment analysis
 valuation
Portfolio construction
 Portfolio evaluation

8. Investment process
Investment policy Analysis Valuation Portfolio construction Portfolio evaluation
Investible fund Market Intrinsic value Diversification Appraisal
Objectives Industry Future value Selection and allocation Revision
Knowledge Company

9. Investment instruments
I. Financial market instruments
A. Marketable.
• Equity shares
• Bonds
• Money market instruments
• Mutual funds
• Financial derivatives

10. B Non marketable
• Bank deposits
• LIC policies
• Provident fund
II Other Investments
• Real estate
• Precious objects

11. • Equity shares: Units of the share capital of a company
which are divided in to smaller denominations for
enabling the public to participate in the venture.
• Bonds : Debt instruments which represents the long
term borrowing of the company . Issuer of the bond
promises to pay an interest payment for a stipulated
time period.
• Money market instruments : Debt instruments, Which
have a maturity less than one year period are called
MMI.
• Mutual funds : Individual investors instead of trading
securities directly, entrust the funds to the investment
companies that purchase securities on their behalf.

12. • Financial derivatives : It is an instrument which
derives its value from an underlying asset.