Investment is commitment of fund to some assets..

1. Presenter:
Ashir
Kabita
Babina
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2. Investment
The investment is a commitment of fund to some
assets which takes place at present in an
expectation to receive some direct benefits from
those assets or to increase the value of those
assets which takes place in the future.
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3. Elements of Investment
• Return
• Risk
• Time
• Money
• Securities
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4. Type of Investment
1. Equity Securities
1. Common Stock
2. Preferred Stock
2. Debt Securities
1. Treasury Bill
2. Commercial Paper
3. Certificate of deposits
4. Banker’s Acceptance
5. Repurchase Agreement
6. Treasury notes and Bonds
7. Local Government Securities
8. Corporate Bonds
3. Hybrid Securities
1.Convertible Preferred Stock
2. Convertible Bonds
4. Derivative Securities
1. Options
2. Swaps
3. Forward
4. Futures
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5. Investment Vs. Speculation
Investment Speculation
Time Horizon Long time framework
beyond 12 months
Short-tem holding assets
even for one day with the
objective of gaining high
Profits and Gains
Risk Limited Risk High Risk
Return Consistent over long period
even though moderate
Uncertain and unstable
Decision Making Based on sufficient
information and analysis
Made with limited
information and analysis
Sources of Income Primary Source : earning of
the firm
Primary source:
change in market price of
an asset
Psychological attitude of
participant
Cautions and conservative Daring and careless in
nature
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6. Investment Vs. Gambling
Investment Gambling
Time Horizon Long time framework
beyond 12 months
Very short time horizon
may less than 1 hour
Risk Limited Risk High risk
Return Long time framework
beyond 12 months
Highly uncertain and
unstable
Decision Making Based on sufficient
information and analysis
Based on tips, rumors,
hunches, etc.
Sources of Income Primary Source : earning of
the firm
Result of short-term actual
and artificial market price
volatility
Psychological attitude of
participant
Cautions and conservative Daring and careless
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7. Hedging
• Making an investment to reduce the risk of
adverse price movements in an asset.
• Normally, a hedge consists of taking an
offsetting position in a related security, such as a
futures contract.
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