INVESTMENT SCENARIO

Security Analysis
Semester 3
 Concept of Investment
• Sacrificing something now for the
prospect of gaining something later.
• Time
• Present Sacrifice
• Future prospective gain.
 Investment, Speculation,
Gambling
• An element of speculation in all
investment decision; but all
investments are not speculative.
• Genuine Investment- a carefully
thought out, calculated risk.
• Speculation – investment based on
rumors, hot tips, inside information,
market trend.
• Time horizon and risk-return
charateristics.
 Investment, Speculation,
Gambling
• Gambling- An act of betting on an
uncertain outcome.
• No clear demarcation between
investment, speculation and
gambling.
• Matter of degree and opinion.
 Investment Objectives
• Near term high priority goals.
• Long term high priority goals.
• Low priority goals.
• Entrepreneurial or money making
goals.
 Investment Constraints
• Liquidity
• Age
• Need for regular income
• Time horizon
• Risk tolerance
• Tax liability
 Financial Markets
• Players – Borrowers, lenders and
intermediaries.
• Instruments – Securities.
• Structure – Capital market and
money market
• Forms – Primary and secondary
markets.
 Investment Classification
• Financial and real investments.
• Security form and non security form.
• Fixed income and variable income.
 Security Forms of Financial
Investment
• Gilt-Edged Securities
– Treasury Bills
– GoI Dated Securities
– Quasi Government Dated Securities
– Petro Bonds and other securities
 Corporate Debentures
• Promissory notes issued by listed companies.
• Debenture trust deed, trustees and holders.
• Zero Coupon Bond.
• Call and put options.
• Debenture Redemption Reserve.
• Types of debenture
– Straight and mortgage debentures
– Registered and bearer debentures
– Convertible, partially convertible and non-
convertible debenture
 Non Security Form of
Financial Investment
• PO Saving Schemes
• PPF
• NSC
• MFs
• Bank and Corporate Deposits
• REMFs
• Gold ETFs.
 Real Investments
• Land and property
• Bullion
• Precious Stones
• Art Objects.
 Land and Property
• Effective inflation hedge, capital
appreciation.
• Real estate as an asset and
collateral.
• Property tax.
• Income and wealth tax.
• Liquidity.
• Rental income.
• Maintenance cost.
Bullion and Precious Stones
• Effective inflation hedge.
• Mobility.
• Storage of value.
• Collateral and asset.
• Liquidity.
• 4Cs for precious stones
 Art Objects
• Paintings
• Antiques
• Art Mutual Funds.
• Evaluation of art object as an
investment considering liquidity,
mobility, maintenance cost, regular
income and tax liability.
THANK YOU

Mayank Patel