Investment Analysis And Portfolio Management by Chandra

PART
1
Introduction
 1. Overview
 A Broad Map of the Territory
 2. Investment Alternatives
 Choices Galore
 3. Securities Market
The Battlefield

Chapter 1

Overview
A Broad Map of the Territory

LEARNING OBJECTIVES

After studying this chapter you should be able to
 Distinguish the characteristics of an investor from that of a speculator.
 Describe various investment alternatives.
 Compare investment alternatives on key investment attributes.
 Identify different types of financial markets.
 Describe major steps in the portfolio management process.
 Describe the common errors committed by investors.

In its broadest sense, an investment is a sacrifice of current money or other resources 
for future benefits. Numerous avenues of investment are available today. You can 
deposit money in a bank account or purchase a long-term government bond or invest 
in the equity shares of a company or contribute to a provident fund account or buy a 
stock option or acquire a plot of land or invest in some other form.
 The two key aspects of any investment are time and risk. The sacrifice takes place 
now and is certain. The benefit is expected in the future and tends to be uncertain. In 
some investments (like government bonds) the time element is the dominant attribute. 
In other investments (like stock options) the risk element is the dominant attribute. In 
yet other investments (like equity shares) both time and risk are important.
 Almost everyone owns a portfolio of investments. The portfolio is likely to comprise 
financial assets (bank deposits, bonds, stocks, and so on) and real assets (car, house, and 
so on). The portfolio may be the result of a series of haphazard decisions or may be the 
result of deliberate and careful planning.
 Your economic well-being in the long run depends significantly on how wisely 
or foolishly you invest. This book discusses the techniques and principles useful in 
systematic and rational investment management. It seeks to improve your abilities in 
the field of investments.

Investment Analysis And Portfolio Management by Chandra