Chapter 1 Introduction o The investment environment o Securities e The term security will be used to refer to a legal representation of the right to receive prospective future benefits under stated conditions ● Treasury bills Long-term bonds o Common stocks ● Security market o Financial intermediaries
Chapter 1 Introduction The investment environment ⚫ Securities ⚫ The term security will be used to refer to a legal representation of the right to receive prospective future benefits under stated conditions. ⚫ Treasury bills ⚫ Long-term bonds ⚫ Common stocks ⚫ Security market ⚫ Financial intermediaries
Chapter i Introduction Direct method Issues securities Genera Corporation「" Provides funds Public Indirect method Issues Offers Securities Accounts Financial General Corporation,-- Intermediary Public Provides Provide Funds Funds
Chapter 1 Introduction Direct method Corporation General Public Issues securities Provides funds Indirect method Corporation Financial Intermediary General Public Issues Securities Provides Funds Offers Accounts Provide Funds
Chapter i Introduction o The investment process There is a five-step procedure decisions form for investment process: o Set investment policy o Perform security analysis o Construct a portfolio o Revise the portfolio o Evaluate the performance of the portfolio Investment policy When an investor set investment policy, he or she must determining the objectives and the amount of his or her investable wealth
Chapter 1 Introduction The investment process There is a five-step procedure decisions form for investment process: o Set investment policy o Perform security analysis o Construct a portfolio o Revise the portfolio o Evaluate the performance of the portfolio ▪ Investment policy When an investor set investment policy, he or she must determining the objectives and the amount of his or her investable wealth
Chapter 1 Introduction Investment objectives should be stated in terms of both risk and return This step concludes with the identification of the potential categories of financial assets for consideration in the ultimate portfolio Security analysis Securities analysis involves examining a number of individual securities(or groups of securities) within the broad categories of financial assets previously identified One purpose for conducting such examinations is to identify those securities that currently appear to be mispriced
Chapter 1 Introduction Investment objectives should be stated in terms of both risk and return. This step concludes with the identification of the potential categories of financial assets for consideration in the ultimate portfolio. ⚫ Security analysis Securities analysis involves examining a number of individual securities (or groups of securities) within the broad categories of financial assets previously identified. One purpose for conducting such examinations is to identify those securities that currently appear to be mispriced
Chapter 1Introduction There are tow classifications approaches to securities analysis. Technical analysis Fundamental analysis o Portfolio construction Portfolio construction is to identifying those specific assets in which to invest, as well as determining the proportions of the investor's wealth to put into each one o Portfolio revision o Portfolio performance evaluation e Asset ownership by individual investors o Institutional investor and individual investor
Chapter 1 Introduction There are tow classifications approaches to securities analysis. Technical analysis Fundamental analysis ⚫ Portfolio construction Portfolio construction is to identifying those specific assets in which to invest, as well as determining the proportions of the investor’s wealth to put into each one. ⚫ Portfolio revision ⚫ Portfolio performance evaluation Asset ownership by individual investors ⚫ Institutional investor and individual investor