Melbe Summary
Melbe Summary
Melbe Summary
The investment is the employment of funds on assets with the aim of earning income or capital
appreciation and the Investment has two attributes the time and risk. And there are two kind of
investment the economist and financial investment. The economist investment is the net addition made
to the nation's capital stock that consists of goods and services that are used in the production process
and the financial investment is the allocation of money of assets that are expected to yield some gain
over a period of time. Then they are related to each other because the savings of the individual flow into
the capital market as financial investments is to be used in economic investment.
The four characteristic of Investment the returns, risk, safety and liqudity. Returns are characterized by
the expectation of a return; Risk is inherent in any investment this risk may relate to loss of capital, delay
in repayment of capital, non-payment of interest, or variability of returns; The safety of on investment
implies the certainty of return of capital without loss of money or time; And the liquidity is an
investment which is easily saleable or marketable without loss of money and without loss of time is said
to possess liquidity. The objectives of the investor are minimizing the risk involved in investment and
maximize the return from the investment and can be stated as: Maximization or return, Minimization of
risk and Hedge against inflation.
The investment and speculation are closely related. They are both involve purchase of assets like shares
and securities. Traditionally, investment is distinguished from speculation with respect to three factors:
risk, capital gain and time period. In the Investment vs. Gambling the investment has also to be
distinguished from gambling Typical examples of gambling are horse races, card games, lotteries, etc.
Gambling consists in taking high risks not only for high returns, but also for thrill and excitement, and
gambling is unplanned and non-scientific, without knowledge of the nature of the risk involved. Then
the investment avenues was categorized the following: Corporate Securities, Deposits, Mutual Fund
Schemes, Mutual Funds Company, Post office deposits and certificates, Life insurance policies, Provident
gund schemes and Government and semi-governmnet securities.
Lesson 1.2
Equity shares are the main source of finance of a firm. The main features of equity shares are: They are
permanent in nature; Equity shareholders are the actual owners of the company and they bear the
highest risk; Equity shares are transferable; Dividend payable to equity shareholders is an appropriation
of profit; And Equity shareholders is not get fixed rate of dividend. And the stock markets are classified
shares into Growth shares, Income shares, Defensive shares, Cyclical shares and Speculative shares.
Life Insurance Companies are always offers a wide range of schemes to fulfill the needs of the individual
investor. There are 2 Basic Life Assurance Plan. First the whole life assurance plan it is very affordable
insurance plan where the sum assure is payable on the death of the life assured. and Endowment
assurance plan. They are available with the facility of paying the premiums for a limited period. And
Term Assurance Plans is life insurance that provides coverage at a fixed rate of payments for a limited
period of time or the relevant term.
Nowadays Mutual funds are a popular choice among investors because they generally offer affordability
and liquidity thats why investment companies or investment trust obtain fund from large number of
investor through sales unit. The funds are collected from the investors arr place under professional
management for the benefit of the investors. And the mutual funds are broadly classified into open-
ended scheme and close-ended scheme. Then the other classification of mutual funds: Growth, income ,
balance, money market, tax saving and index schemes.
This is the following reasons for low price of gold in the international market: i) Weak demand from
Asian countries which are the largest consumers of gold. ii) Continuing pressure on central banks to
dishoard gold. iii) Legislative measure like the Swedish Government move to delink gold from Swiss
Franc and lower gold reserves by the European Union. Gold and silver is form of investment you can
exchange or sell in a low cost specially when it is an jeweltry they buy jewelry less than the total
purchase price .
The real estate market are offers a high return to the investors. And this are the 4 reason for investing
in real estate: High capital appreciation compared to gold or silver particularly in the urban area;
Availability of loans for the construction of houses. ; The Tax rebate is given to the interest paid on the
housing loan; The possession of a house gives an investor a psychologically secure feeling and a
standing among his friend and relatives.
In the art the price of art market are higher and valauble. If the the investor like to buy paintings you
should know this following points.: paintings of the young paintings, should possess the basic idea of
the painting and the investor should have aestheic sense. The antiques is an object of historal interest
it may be a coin, sculpture, manuscript, or any other object of olden says. In investment, the investors
are carefully look about the fake antique.
Lesson 1.3
There are two important investment avenues for savers the Corporate securities and Government
securities. Understanding of the working of securities in market is essential for practicing portfolio
management and the functioning of the securities market is too vast a subject to be confined. And
there are 2 basic features of securities market: Financial market and Segments of Financial market.
The Financial market is place used for buying and selling goods and the Segments of financial market
are there diffirent types of securities these are: the ownership securities, dept securities, short-term
securities, long-term securities, government securities, non-government securities and corporate
securities.
The financial market can be classified as primary and secondary market depending on the securities
traded newly issued or already oustanding and owned by investors. In participants in the financial
market, financial market is essentially a system by which financial securities are exchanged and
composed of participants, securities, markets, trading arrangements and regulations. Then major
participants are the buyers and sellers of securities or the investors. And the Regulatory Environment,
In the country is subject to a set of regulations in the form of various Acts passed by the legislative
bodies. Then the Primary market, when it is a new company their share are issued in the public in
primary market and there are 3 functions to perform they are: Origination, Underwriting ,and
Distribution.
The methods of Floating New Issues in the market in India are: Public issue, Rights issue, and Public
placement. In public issue, investor are allowed to subscribe to the share being issued by the company
during a specified period ranging minimum of 3 days to 10 days only and can identify in 3 distinct: Pre-
issue tasks, Opening and closing of the issue, and Post-issue tasks.
Book building is a process of price discovery. It puts place a pricing mechanism whereby new
securities are valued on the basis of the demand feedback following a period of marketing. And the
Role of primary market, Primary market is the medium for raising fresh capital in the form of equity
and debt. And then the Regulation of primary market is effective regulation of SEBI at every stage of a
public issue and there are also regulations to ensured fairly practuce by the intermediaries in the
market.
Lesson 1.4 STOCK EXCHANGES
Stock exchange is a market place where stock, shares and other types of securities are bought and
sold. It is market where the owners may purchase or sell/ dispose off their securities as per certain
well defined rules and regulations. Such securities include shares and debentures issued by public
companies, bonds and debentures issued by government, public corporation and municipal and port
trust Board of Directors.
The important role of stock exchange is to fulfil the economic development of a country. First,
provides a market place for purchase and sale of securities such as shares, bonds, debentures, etc;
Second, provide liquidity to the investments in securities, that is, it gives the investors a place to
liquidate their holdings. Third, help in the valuation of securities by providing the market quotations
of the prices of securities. And lastly, play the role of a barometer, namely, an indicator of the state of
health of the nation's economy as a whole.
In the Philippines, PSE they provide and maintain a fair, efficient, transparent and orderly market for
the purchase and sale of securities such as stocks, warrants and others. The role of PSE is to bring the
companies together and aiming to raise capital through the issue of new securities. The Philippines
Stocks Exchange began 79 years ago. One of the non-broker members heads the Exchange, appointed
by the Board as the President and Chief Executive Officer (CEO). And the PSE"S organizational
structure holds five groups, namely: Listings & Disclosure Group, Compliance & Surveillance Group,
Operations/Automated Trading Group, Finance and Investment Group and Business Development &
Information Group along with the Office of the General Counsel, Membership Department and Human
Resources Management Department. The PSE has two trading centers located at the PSE Centre in
Ortigas, Pasig - where its executive officers are situated - and at the PSE Plaza in Makati City. Their
business hours are every monday to friday except saturday and sunday.