1. Introduction - Basics of Investm

08/31/0808/31/08 Introduction and Basics of InvestmentsIntroduction and Basics of Investments 11

Investment Analysis and Portfolio Investment Analysis and Portfolio

ManagementManagement

Alok KumarAlok Kumar


What this Paper is All About?What this Paper is All About?

� The purpose of this paper is to help you learn how to manage your Money so

that you will derive the maximum benefit from what you earn.

� To accomplish you need

1) to learn about investment alternatives that are available today,

2) to develop a way of analyzing and thinking about investments that will

remain with you in years to come when new and different opportunities

become available.

� The paper mixes theory, practical, and application of the theories using

modern/contemporary tool Microsoft Excel.

� Evaluation – (Internal -30) and (External- 70).

� Classes – 24 classes


Topics and ReferencesTopics and References

� The detailed topics are given separately as a file, but in brief we shall be discussing over

following topics

a) Investments Basics a) Investments Basics –– Risk and Return MeasurementRisk and Return Measurement

b) Modern Portfolio Theoriesb) Modern Portfolio Theories

c) Equity Analysis and Debt Analysisc) Equity Analysis and Debt Analysis

d) Portfolio Optimizationd) Portfolio Optimization

e) Portfolio Evaluatione) Portfolio Evaluation

�� References:References:

a) Investment Analysis and Portfolio management by a) Investment Analysis and Portfolio management by Frank K. Reilly and Frank K. Reilly and

Keith C. Brown.Keith C. Brown. –– Thomson PublicationThomson Publication

b) Investments by b) Investments by William F. Sharpe, Gordon J. Alexander, and Jeffery V. William F. Sharpe, Gordon J. Alexander, and Jeffery V.

Bailey.Bailey. –– Prentice Hall PublicationPrentice Hall Publication

c) Class Notes and Handouts. c) Class Notes and Handouts.


Contact MeContact Me

� I will be available in the Institute on Wednesdays. Your doubts are most

welcome and you can contact me through my e-mail id

[email protected].

� I shall be announcing also once in a week doubt session, so anybody has got

problem can contact me on assigned time and date.

� I have certain request –

•• I donI don’’t allow late comers to enter my class.t allow late comers to enter my class.

•• I donI don’’t like listening to ring tones so please put your phone on silent like listening to ring tones so please put your phone on silent mode and t mode and

attend calls only in case there is an emergency that also with pattend calls only in case there is an emergency that also with prior permission.rior permission.

•• I wont accept delayed work, so submit on time, none of the excusI wont accept delayed work, so submit on time, none of the excuses will be es will be

entertained.entertained.

•• You got to have more than 12 attendance to participate in internYou got to have more than 12 attendance to participate in internal marks.al marks.


Contact DetailContact Detail

Alok KumarAlok Kumar

Mind Xpansion Portfolio Private LtdMind Xpansion Portfolio Private Ltd

53/4477, 53/4477, RehgarRehgar PuraPura

Karol Bagh, New DelhiKarol Bagh, New Delhi--110005110005

EE--Mail Mail –– [email protected]@mindxpansion.in

Desk No. Desk No. –– (91)(91)--(11)(11)--(45085396)(45085396)


Let us Start the session!!!Let us Start the session!!!


InvestmentInvestment� Is the current commitment of rupees for a period of time in order to derive

future payments that will compensate the investor for

a) the time the funds are committed (Pure time value of a) the time the funds are committed (Pure time value of

money or rate of interest)money or rate of interest)

b) the expected rate of inflation, andb) the expected rate of inflation, and

c) the uncertainty of the future of payments c) the uncertainty of the future of payments

(investment risk so there has to be risk premium)(investment risk so there has to be risk premium)

�� So in short individual does trade a rupee today for some expecteSo in short individual does trade a rupee today for some expected future d future

stream of payments that will be greater than the current outlay.stream of payments that will be greater than the current outlay.

�� Investor invest to earn a return from savings due to their deferInvestor invest to earn a return from savings due to their deferred red

consumption so they require a rate of return that compensates thconsumption so they require a rate of return that compensates them.em.


InvestmentInvestment

�� So we answered following Questions?So we answered following Questions?

• Why people invest?

• What they want from their investment?

� And now we will discuss

• Where all they can invest and what parameters they adopt to

invest?

• How they measure risk and return and how they


Investment AvenuesInvestment Avenues

� Shares

� Bonds

� Mutual Funds

� Debentures

� PF

� Gold� Silver� Real Estate

� Indira Vikas Patra

� Post Office Deposits

� Bank Deposits

� NSC



�� Investments ParametersInvestments Parameters

• Return

• Risk

• Time Horizon

• Tax Considerations

• Liquidity

• Marketability


RiskRisk--Return Trade offReturn Trade off

Risk

Return

•Gold

•Real Estate

•Shares•MFs Equity Fund

•Bonds•PF

•Debentures•MFs Debt Funds

•Bank Deposit

•NSC, Post-Office DepositKisan Vikas Patra

•Derivatives


Next Next

How to Measure Return and How to Measure Return and

Risk???Risk???



�� ReturnReturn

• Historical

� HPR

� HPY

• Expected

�� RiskRisk

•• HistoricalHistorical

•• ExpectedExpected

Documents

1. Introduction - Basics of Investm