PowerPoint Presentation

Introduction to Investments
Second Edition
by
Haim Levy
Hebrew University of Jerusalem

Prepared by
Richard Gendreau
Bemidji State University

1999 South-Western College Publishing

 Chapter 1
Introduction

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 Macroeconomic Factors
Affecting Investments
Inflation

Unemployment

Interest Rates

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 Questions To Consider
How Does the Federal Reserve Banks
Interest Rate Policy Affect the Market?
What News is Considered Positive?

What News is Considered Negative?

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 Globalization Of The Capital
Markets
Currency Exchange Rates

Interest Rates

Federal Reserve

Exports and Imports

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 Study Of Investments

Macroeconomics Analysis

Industry Analysis

Security Analysis

Individual firm

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 Market Reaction To
Information
Interest Rate Change
Cut rates and stock market goes up
Change must be more than expected
Quarterly Earnings and Dividends
Inflation Rate
Productivity

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 What Is The Difference
Between Corporate Finance
and Investments?

Corporate Finance
Relationship between financial markets
and the firm
Covers project analysis, capital structure,
capital budgeting, and working capital
management
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 Differences Continued!
Investments
Relationship between investors and the
financial markets
Covers security analysis, portfolio
diversification, and hedging

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 Similarities

Initial Investment

Expect Largest Possible Returns

Estimating Future Cash Flows

Discounting Future Cash Flows

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 Primary Focus Of The Book
Financial Markets

Relationship Between

Investments
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Whats The Difference Between
Investments In Real And
Financial Assets?
Divisibility
Marketability
Holding Period
Information Availability

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 Benefits Of Studying
Investments
Enhancing Your Welfare

Career In Investments

Professional investor

Security analysis

Brokerage
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 The Investment Process
Investor Characteristics
Objectives and constraints
Investment Vehicles
Efficient market?
Avoid risk
Strategy Development and Implementation
Problems
Strategy Monitoring
Goals and objectives
Review available financial assets
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 Brief Overview Of The Book
Part 1 Part 4
Investment Environment Market Efficiency
Part 2 Part 5
Risk-Return Components Security Analysis
Part 3
Security Prices And Part 6
Portfolio Management Derivative Securities

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