Transcript day 1 - 0105.ppt

Investments:
Course Introduction
01/05/09
Review: Basic Concepts of Finance
• Time Value of Money
• Risk and Return
1-2
The three branches of finance
• Corporate Finance
• Investments
• Financial Institutions and Markets
1-3
Investment Defined
• Investment literally means “putting something in to
somewhere else”.
• In Finance, a more practical definition is the purchase of
a financial product or other item of value with an
expectation of favorable future returns.
– Expectation denotes risk
1-4
What are the issues related to investments?
• What are the available securities?
• How do I go about buying these securities?
• How do I decide which securities to buy?
– Valuation
– Within the context of a portfolio
– Other reasons for buying
1-5
Course overview
• Brief discussion of return and risk and security types
– Stocks, bonds, derivatives (futures and options)
• Basics of trading
• Equity valuation
– DCF models, residual income models, relative valuation models
• Equity risk and return within the context of a portfolio
– Diversification
1-6
Course overview
• Bonds
– Corporate, Government, derivative products and features
– Interest rates and bond valuation
• Basics of derivative securities (options and futures)
– Use in speculation and hedging
– Option strategies
1-7