1. .CHHATRAPATI SHAHU JI
MAHARAJ UNIVERSITY, KANPUR
INVESTMENT MANAGEMENT
Group 2 BARCLAYS
(MBA-FC 2nd semester)
Parul Singh
Samreen Hashim
Sneha Banerjee
Atif Mohammad
Mohd Nadeem
Mohd Baizad Malik
3. Investment involves making of a
sacrifice in the present with the hope
of deriving future benefits.
It is considered the sacrifice of certain
present value of money in
anticipation of a reward.
6. These are the financial instruments that are used in
investment with the anticipation of getting growth or
return in the form of large sum of money.
These are the non-physical assets, that cannot be seen or
touched, but are present in electronic form.
Example:- Mutual funds, shares, bonds, debentures,
equities, etc.
7. These are the assets that are used as an investment
alternative.
The prices of non-financial investments can increase as
well as decrease with time.
These are the assets which are physically present and can
be seen or touched.
Example:- Real estate, gold/silver, etc.
8. DEPOSIT
A sum of money placed or kept in a bank
account, usually to gain interest. The term
Deposit refers to an amount of money in cash
or check form or sent via a wire transfer that
is placed into a bank account. The target
bank account for the Bank Deposit can be
any kind of account that accepts deposits.
9. TYPES OF DEPOSITS
Demand Deposit
a) Saving deposits
b) Current deposits
FIXED/TERM/TIME DEPOSITS
a) Recurring Deposit
b) Cumulative deposit
c) Non-Cumulative Deposit
10. List of Post Office and Government
Schemes in India
Post office time deposits
The post office time deposits scheme fall
under the category of fixed deposits and are
available at all the post offices throughout
India. The investors are not entitled to receive
any amount towards interests on a monthly
basis but receive a lump sum amount as
interest when the scheme matures.
11. Post office monthly income scheme
The monthly income scheme also falls under
the category of fixed deposits and the tenure
of this scheme is 6 years. The post office has
made it a rule to accept only a single deposit
in an account and the monthly income
schemes are available in all the post offices in
India.
12. Kisan Vikas Patra
Kisan Vikas Patra certificates are
secured by the backing of the
central government of India which
makes it the most effective post
office saving.
13. Public provident funds (PPF)
The public provident funds (PPF) can be
started with a sum of 500 and can extend to
1,00,000 and the account can be shifted from
a post office to another post office or from a
post office to a bank or from one bank to
another.
14. Post office recurring deposit
The tenure of the post office recurring deposit
accounts is 5 years which comprise of 60
equal monthly deposits of at least Rs.10
towards each installment.
15. Senior Citizen Savings Scheme (SCSS)
Account
These accounts may be opened by an
individual, who has attained 60 years of age or
above on the date of opening of the account.
16. National Savings Certificate
This scheme is specially designed for
government employees, businessmen and
other salaried classes who are Income Tax
assesses.
17. Pradhan Mantri Jan Dhan Yojana
Under this scheme financial services like
bank’s savings and deposit accounts,
remittance, credit, insurance, pension, and
more, is provided to those who are from rural
area and do not have access or does not have
any bank account.
18.
19. WHAT IS MONEY MARKET
INSTRUMENTS ?
DEBTS INSTRUMENTS, WHICH HAVE A MATURITY OF
LESS THAN ONE YEAR AT THE SAME TIME OF ISSUE
ARE CALLED MONEY MARKET INSTRUMENTS.
THESE INSTRUMENTS ARE HIGHLY LIQUID AND HAVE
NEGLIGIBLE RISK.
THE MONEY MARKET IS DOMINATED BY THE
GOVERNMENT, FINANCIAL INSTITUTIONS, BANKS,
AND CORPORATES.
21. TREASURY BILLS
ISSUED BY GOI
THEY ARE OF TWO DURATIONS – 91 DAYS AND 364 DAYS
ARE NEGOTIABLE INSTRUMENTS AND CAN BE REDISCOUNTED WITH GOI
THEY ARE SOLD ON AN AUCTION BASIS EVERY WEEK IN CERTAIN MINIMUM
DENOMINATIONS BY THE RBI
THEY DO NOT CARRY AN EXPLICIT INTEREST RATE. INSTEAD THEY ARE
ISSUED AT A DISTOUNT TO BE REDEEMED AT PAR. THE IMPLICT RETURN IS A
FUNCTION OF THE SIZE OF DISCOUNT AND THE PERIOD OF MATURITY.
THEY HAVE ZERO DEFAULT RISK, ASSURED RETURN, ARE EASILY AVAILABLE
22. CERTIFICATES OF DEPOSITS
NEGOTIABLE INSTRUMENTS ISSUED BY BANKS / FINANCIAL
INSTUTIONS WITH A MATURITY RANGING FROM 3 MONTHS TO
1 YEAR
THESE ARE BANKS DEPOSITS TRANSFERABLE FROM ONE
PARTY TO ANOTHER
THE PRINCIPAL INVESTORS ARE BANKS, FINANCIAL
INSTITUTIONS, CORPORATES AND MUTUAL FUNDS
THESE CARRY AN EXPLICIT RATE OF INTEREST
BANKS NORMALLY TAILOR MAKE THEIR DENOMINATIONS AND
MATURITIES TO SUIT THE NEEDS OF THE INVESTORS
23. COMMERCIAL PAPER
ISSUED IN FORM OF PROMISSORY NOTES REDEEMABLE AT PAR BY THE HOLDER ON
MATURITY
USUALLY HAS A MATURITY PERIOD OF 90 TO 180 DAYS
THEY ARE SOLD AT A DISCOUNT TO BE REDEEMED AT PAR
CPs CAN BE ISSUED BY CORPORATES HAVING A MINIMUM NET WORTH OF RS 5 CRORES
AND AN INSVESTMASNT GRADE FROM CREDIT RATING AGENCIES
MINIMUM ISSUE SIZE IS RS 25 LACS
24. REPOS
A “REPO” INVOLVES A SIMULTANEOUS “SALE AND
REPURCHASE” AGREEMENT.
A repurchase agreement is the equivalent of a short-term,
collateralized loan. An owner of marketable securities sells those
securities to a buyer for cash. As part of the deal, the seller
agrees to buy back the securities at a later date. That later date
can be the next day, or may be the next week. The price paid
to repurchase the securities is higher than the original selling
price. The spread between the original price and the repurchase
price is equivalent to interest.
Repurchase agreements are often used by institutions with
available cash that are looking for quick, easy ways to get a
return on their money with little risk.
25. A collateralized borrowing and lending obligation (CBLO)
is a money market instrument that represents an obligation
between a borrower and a lender as to the terms and
conditions of the loan. Collateralized borrowing and lending
obligations (CBLOs) are used by those who have been
phased out of or heavily restricted in the interbank call
money market.
collateralized borrowing and lending
obligation (CBLO)
26.
27. BONDS OR DEBENTURES
BONDS OR DEBENTURES REPRESENTS LONG-TERM
DEBT INSTRUMENTS in which an investor loans money to
an entity (corporate or governmental) that borrows the fund
for a defined period of time at a fixed interest rate.
A BOND OR DEBENTURE is like a loan: the issuer is the borrower
(debtor), the holder is the lender (creditor), and the coupon is the
interest. Bonds provide the borrower with external funds to finance
long-term investments, or, in the case of government bonds, to finance
current expenditure.
28. TYPES OF BONDS OR
DEBENTURES
CENTRAL GOVENRMENT SECURITIES
STATE DEVELOPMENT LOANS
PUBLIC SECTOR UNDERTAKING BONDS
PRIVATE SECTOR DEBENTURES
PREFERENCE SHARES
29. CENTRAL GOVENRMENT
SECURITIES
A government security is a bond issued by a
government authority with a promise of repayment
upon maturity.
Government securities such as savings
bonds, treasury bills and notes also promise
periodic coupon or interest payments.
These securities are considered low-risk, since
they are backed by the taxing power of the
government.
30. STATE DEVELOPMENT LOANS
SDLs ARE DEBT SECURITIES ISSUED BY THE
STATE GOVERNMENT. RBI MANAGES THE
ISSUE OF THESE SECURITIES. EACH STATE
IS ALLOWED TO ISSUE THESE SECURITIES
UPON A CERTAIN LIMIT EACH YEAR. THE
COUPON RATES OF SDLs ARE MARGINALLY
HIGHER THAN THOSE G-secs FOR THE SAME
MATURITY.
31. PUBLIC SECTOR UNDERTAKING BONDS
PSU are medium and long term obligations issued by
public sector companies in which the government share
holding is generally greater than 51%.
some PSU Bonds carry tax exemptions.
the minimum maturity is 5 years for taxable bonds and 7
years for tax-free bonds. PSU bonds are generally not
guaranteed by the government and are in the form of
promissory notes transferable by endorsement and
delivery.
32. PREFERENCE SHARES
Preference shares are those shares which carry certain special or
priority rights. Firstly, dividend at a fixed rate is payable on these
shares before any dividend is paid on equity shares.
Secondly, at the time of winding up of the company, capital is
repaid to preference shareholders prior to the return of equity
capital. Preference shares do not carry voting rights. However,
holders of preference shares may claim voting rights if the
dividends are not paid for two years or more on cumulative
preference shares and three years or more on non-cumulative
preference shares.
33.
34. EQUITY SHARES
Equity shares are the main source of finance of a firm. It is
issued to the general public.
Equity shares were earlier known as ordinary shares. The
holders of these shares are the real owners of the company
Equity shareholders do not enjoy any preferential rights with
regard to repayment of capital and dividend.
They are entitled to residual income of the company, but they
enjoy the right to control the affairs of the business and all the
shareholders collectively are the owners of the company
The value of equity shares are expressed in terms of face value
or par value, issue price, book value, market value etc
A point comes where the company reaches a very big level and
requires huge capital investment for business growth. It then
offers its equity share to the general public. This is called
Initial Public Offer (IPO). More such issues in future are
called Follow-on Public Offer (FPO)
Pic 1 Pic 2
35. Owned capital
Fixed value or nominal value
Distinctive number
Right To control
Return on shares
Transfer of shares
Benefit of right issue
Benefit of Bonus shares
Capital appreciation
Features
of Equity
Shares:
36. TYPES OF EQUITY SHARES
EQUITY
SHARES
Speculative shares
Defensive shares
Cyclical shares
Growth shares
Penny stocks
Income shares
Blue chips shares
Value shares
37. i. Advantages from the Shareholders’ Point of View
(a) Equity shares are very liquid and can be easily sold in the capital market.
(b) In case of high profit, they get dividend at higher rate.
(c) Equity shareholders have the right to control the management of the company.
ii. Advantages from the Company’s Point of View:
(a) They are a permanent source of capital and as such; do not involve any repayment liability.
(b) They do not have any obligation regarding payment of dividend.
Disadvantages of Equity Shares
i. Disadvantages from the Shareholders’ Point of View:
(a)Equity shareholders get dividend only if there remains any profit after paying debenture interest,
(b)tax and preference dividend.
Thus, getting dividend on equity shares is uncertain every year.
ii. Disadvantage from the Company’s Point of View:
(a) Cost of equity is the highest among all the sources of finance.
(b) Payment of dividend on equity shares is not tax deductible expenditure.
38.
39. MUTUAL FUNDS
Mutual fund is the pool of the money, based on the trust who invests the savings of a number of
investors who shares a common financial goal, like the capital appreciation and dividend earning.
The money thus collect is then invested in capital market instruments such as shares,
debenture and foreign market. Investors invest money and get the units as per the unit value
which we called as NAV (net assets value).
Mutual fund = returns - expanses
43. ADVANTAGES OF MUTUAL FUNDS
Mutual funds have designed to provide maximum benefits to investors, and fund
manager have research team to achieve schemes objective.
1. Portfolio Diversification
2. Professional Management
3. Less Risk
4. Low Transaction Costs
Liquidity Flexibility
Safety Choice of Schemes
Transparency
DISADVANTAGES OF MUTUAL FUNDS
1. Costs Control Not in the Hands of an Investor
2. No Customized Portfolios
45. Investment
Product
An investment product is a product purchased
with the expectation of earning a favorable
return. Investment products can be income-
producing, as with fixed-interest
earning products, or more speculative in
nature, as with stocks and options.
46. Types of Investment Plan
Term Assurance Plan
Unit-Linked Insurance Plans
Traditional Investment-Oriented
Plans
47. Review your own insurance needs and circumstances.
Be sure that you can handle premium payments.
Don’t buy life insurance unless you intend to stick
with your plan.
Check the claim settlement record before buying a
cover.
Be careful while surrendering your insurance policy
49. Employees Provident Fund scheme
Feature
• Employer and employee both are required to contribute 12% of
the employee’s basis wages, DA, and retaining allowance every
month
• The employee can choose to contribute additional amounts,
subject to certain restrictions.
• The interest rate on the provident fund balance is declared
annually.
• The balance in the PF account in fully exempt from wealth tax.
• Within certain limit, the employee is eligible to take a loan
against the provident fund balance pertaining to his
contributions only.
50. Employees Pension scheme
(EPS)
This scheme is administered by the EPFO,
under this scheme 8.33 % from the employer’s
contribution of 12 % to the employee
provident fund is diverted to the Employee
pension scheme.
51. It is defined contribution basis, the payout on the completion
of the scheme or retirement depends on the returns generated
from the contributions made by subscriber.
The PFRDA will regulate and develop the pension market.
The scheme offers various mixes of equity and debt and also
has a default option that allocates contributions between debt
and equity based on the age of the contributor.
The NPS is a good vehicle for building a corpus for
retirement, the govt has opened it to all individuals with effect
from April 1 2009.
52. There are various schemes and annuity products that
investors may subscribe to voluntary primarily to
provide retirement benefits. The important ones are :-
Public provident fund
New pension scheme
Pension plan of insurance companies
Mutual funds
53. An immediate annuity plan can be purchased
by paying a lump sum amount. It provides for
annuity payments at a stated amount
immediately after purchase of the plan. There is
a variety of options are available for the type
and mode of payment.
54. A deferred annuity enables the policyholder
to build up a pension that becomes payable
on his or her retirement from gainful
employment.
55. REAL
ESTATE
Real estate is a booming industry in India. It has huge prospects in all
the major sectors like housing, commercial, manufacturing, hospitality,
retail etc.
Real Estate is termed as the
“Money Making Industry” in
the country.
60. ART OBJECTS AND
COLLECTIBLES
Not sensitive to interest
rate fluctuations
Hedge against inflation
Uptrend
Increasing demand:
PAINTINGS
SCULPTURES
ANTIQUES
61.
62. Derivatives does not have a value of its own. Rather its
value depends on the value of the underlying asset.
63. It is a standardized contract with a standard underlying asset, a
standard quantity an quality of under lying instrument and a
standard timing of instrument.
Transferable contract between two parties to buy or
sell an asset at a certain date in the future at a
specified price.
64. An option is a contract that goes a step further and
provides the buyer of the option the right without the
obligation, to buy or sell put as specified asset at an
agreed price on or upto a specific date.
An option gives its holder the right to buy or sell an underlying asset
on or before a given date at a predetermined price.
65. CALLS give the buyer the right but
not the obligation to buy a given
quantity of the underlying asset, at a
given price on or before a future given
date.
PUTS gives the buyer the right, but not
obligation to sell a given quantity of the
underlying asset at a given price on or
before a given date.
66. Investment is nothing but goods or
commodities purchased today to be used in
future or at the times of crisis, not everyday is
bed of roses. So invest wisely.
