tailieunhanh - Lecture Investment analysis & portfolio management - Chapter 6: Investment analysis
This definition contains within it a number of important points. Firstly, there are the facts about financial securities: how to trade and what assets there are to trade. Secondly, there are issues involved in studying these securities: the calculation of risks, returns and the relationship between the two. Then there is the question of what success means for an investor, and the investment strategies which ensure that choices are successful. Finally, there are the theories that are necessary to try to understand how the markets work and how assets are priced. | Investment Analysis Lecture: 6 Course Code: MBF702 Outline Investment analysis - RECAP Time value of money Annuity Cash flows Net present value Investment analysis - recap ”Investment analysis is the study of financial securities for the purpose of successful investing.” This definition contains within it a number of important points. Firstly, there are the facts about financial securities: how to trade and what assets there are to trade. Secondly, there are issues involved in studying these securities: the calculation of risks, returns and the relationship between the two. Then there is the question of what success means for an investor, and the investment strategies which ensure that choices are successful. Finally, there are the theories that are necessary to try to understand how the markets work and how assets are priced Investment Appraisal 4 Time Value of Money A dollar today is worth more than a dollar a year from now. Therefore, investments that promise earlier returns are | Investment Analysis Lecture: 6 Course Code: MBF702 Outline Investment analysis - RECAP Time value of money Annuity Cash flows Net present value Investment analysis - recap ”Investment analysis is the study of financial securities for the purpose of successful investing.” This definition contains within it a number of important points. Firstly, there are the facts about financial securities: how to trade and what assets there are to trade. Secondly, there are issues involved in studying these securities: the calculation of risks, returns and the relationship between the two. Then there is the question of what success means for an investor, and the investment strategies which ensure that choices are successful. Finally, there are the theories that are necessary to try to understand how the markets work and how assets are priced Investment Appraisal 4 Time Value of Money A dollar today is worth more than a dollar a year from now. Therefore, investments that promise earlier returns are preferable to those that promise later returns. The time value of money concept recognizes that a dollar today is worth more than a dollar a year from now. Therefore, projects that promise earlier returns are preferable to those that promise later returns. 5 The time value of money concept recognizes that a dollar today is worth more than a dollar a year from now. Therefore, projects that promise earlier returns are preferable to those that promise later returns. The investment analysis or capital budgeting techniques that best recognize the time value of money are those that involve discounted cash flows. Time Value of Money 6 Time Value of Money If someone offers you Rs 1,000 today or Rs 1,000 in one year, what would you do? If someone offers you Rs 980 today or Rs 1,000 in one year, what would you do? If someone offers you Rs 900 today or Rs 1,000 in one years, what would you do? Time value of money Example 1: Invest Rs1,000 at 10% for 1 year, then the Future Value is Rs1,100
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