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Course Overview in Agbus 412 Investment Management
Course Overview in Agbus 412 Investment Management
MANAGEMENT
Overview
This course deals with the broad
spectrum of concepts, principles,
analytical techniques, policies and
practices regarding institutional
investment. It provides the target
audience with a broad knowledge
on the key topics of investment
analysis and management.
OBJECTIVES
5% of 10,000.00 5%10,000.00
Principal 10,000.00 Year 1=500
Year 1 =500
“Commitment of funds made in the expectation of some
positive rate of return”
5% of 10,000.00
Year 2 =500
INVESTMENT
5%10,500.00
Year 2=525
▪ ECONOMIC INVESTMENT:
▪ COMMITMENT INVESTMENT
▪ FINANCIAL INVESTMENT
TYPES OF INVESTMENT
ECONOMIC INVESTMENT:
It refers to the net additions to the capital stock of the society which consists of goods and services that
are used in the production of other goods and services.
COMMITMENT INVESTMENT
It refers to the money commitment to satisfy personal desires, since no rate of return is involved in such
investment nor capital growth is expected.
Ex. A commitment of money to a new car is an investment from an individual point of view.
FINANCIAL INVESTMENT
It involves the investment of funds in various assets, such as stock,bonds,real estate etc. Investment is
the employment of funds with the aim of achieving additional income or growth in value.
Household
Financial
Intermediaries
INVESTMENT OBJECTIVES
1.Security
Treasury Bills,
Central to any investment objectives, we have
Certificate of Deposits,
to basically ensure the safety of the principal Commercial Paper,
An investment can afford to lose the return at Bond, Municipal and
any given point of time but he cannot afford to Gov. Bonds and
lose the principal itself. Corporate Bonds
2. Liquidity
Because we may have to convert our investment back to cash or funds
to meet our unexpected demands and needs should be highly liquid.
Liquid- easily
WHY SHOULD OUR converted into cash
INVESTMENT
BE LIQUID????
BASIC OBJECTIVES OF INVESTING
3.Yield
Yield is basically as the net return out of any investment.
Given the level or kind of security and liquidity of the
investment , the appropriate yield should encourage the
investor to go for the investment.
RELATIONSHIP AMONG SECURITY, LIQUID AND YIELD
There is a trade-off between risk ( Security) and return (Yield) on the one hand and
liquidity and return (Yield) on the other
Security Yield
Liquidity Yield
SECONDARY INVESTMENT OBJECTIVES
Tax Minimization
Marketability
TAX MINIMIZATION
TAX
DODGING
An investor may pursue certain investment in order to adopt tax
minimization as art of his / her investment strategy
UNDERSTATEMENT
OF INCOME
DECREASE THE
Reducing the amount of your gross income that INCOME
is subject to
taxes.
OVERSTATEMENT
OF EXPENESE
Deduction for Increase Open a Health
Investments in Property Retirement Savings
and Equipment Contributions Account.
MARKETABILITY
For
example
WHY DO INDIVIDUALS INVEST?
Overview
In this module, students are guided to appreciate and understand the
investments field as it is currently understood and practiced for sound
investment decisions making.
This module presents key concepts to provide an appreciation of the
theory and practice of investments, focusing on investment portfolio
formation and management issues.
LESSON 1 – INVESTING VS. FINANCING
Introduction
Knowing the difference between investing and financing allows us to
understand the unique relationships of investors and companies and
their interactions with the financial market.
This lesson provides an understanding on how investors raise their initial
wealth and how corporations raise money to finance their program of
operations.
OBJECTIVES
But at the same time both corporate finance and investments are built upon a
common set of financial principles, such as the present value, the future value,
the cost of capital. And very often investment and financing analysis for
decision making use the same tools, but the interpretation of the results from
this analysis for the investor and for the financier would be different.
For example, when issuing the securities and selling them in the market the
company perform valuation looking for the higher price and for the lower cost
of capital, but the investor using valuation search for attractive securities with
the lower price and the higher possible required rate of return on his/her
investments.
ABSTRACTION