Investment Analysis and Portfolio

Management

Alok Kumar

08/31/08 Introduction and Basics of Investments 1

 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
08/31/08 Introduction and Basics of Investments 2
 Topics and References

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

a) Investments Basics – Risk and Return Measurement

b) Modern Portfolio Theories

c) Equity Analysis and Debt Analysis

d) Portfolio Optimization

e) Portfolio Evaluation

References:

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

Keith C. Brown. – Thomson Publication

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

Bailey. – Prentice Hall Publication

c) Class Notes and Handouts.

08/31/08 Introduction and Basics of Investments 3

 Contact 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
alok.kumar@mindxpansion.in.

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 don’t allow late comers to enter my class.

• I don’t like listening to ring tones so please put your phone on silent mode and
attend calls only in case there is an emergency that also with prior permission.

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

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

08/31/08 Introduction and Basics of Investments 4
 Contact Detail

Alok Kumar
Mind Xpansion Portfolio Private Ltd
53/4477, Rehgar Pura
Karol Bagh, New Delhi-110005
E-Mail – alok.kumar@mindxpansion.in
Desk No. – (91)-(11)-(45085396)

08/31/08 Introduction and Basics of Investments 5

 Let us Start the session!!!

08/31/08 Introduction and Basics of Investments 6

 Investment

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

money or rate of interest)

b) the expected rate of inflation, and

c) the uncertainty of the future of payments

(investment risk so there has to be risk premium)

So in short individual does trade a rupee today for some expected future
stream of payments that will be greater than the current outlay.

Investor invest to earn a return from savings due to their deferred

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

08/31/08 Introduction and Basics of Investments 7

 Investment

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

08/31/08 Introduction and Basics of Investments 8

 Investment Avenues

 Gold
 Shares
 Silver
 Real Estate  Bonds
 Mutual Funds
 Indira Vikas Patra
 Debentures
 Post Office Deposits
 Bank Deposits  PF
 NSC

08/31/08 Introduction and Basics of Investments 9

 Investment

Investments Parameters
• Return

• Risk

• Time Horizon

• Tax Considerations

• Liquidity

• Marketability

08/31/08 Introduction and Basics of Investments 10

 Risk-Return Trade off
Return •Derivatives

•Shares
•MFs Equity Fund
•Real Estate
•MFs Debt Funds
•Debentures
•NSC, Post-Office Deposit
Kisan Vikas Patra
•PF
•Bonds
•Bank Deposit
•Gold

Risk
08/31/08 Introduction and Basics of Investments 11
 Next
How to Measure Return and
Risk???

08/31/08 Introduction and Basics of Investments 12

 Investment

Return
Risk
• Historical • Historical

HPR • Expected

HPY

• Expected

08/31/08 Introduction and Basics of Investments 13