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• Financial investment is the allocation of money of

  assets that are expected to yield some gain over a

  period of time
• CHARACTERISTIC OF INVESTMENT

  RISK

  LIQUIDITY

  SAFETY
• RISK- It refers to the possibility of incurring a loss in a financial transaction.
• Safety - The safety of investment implies the certainty of return of capital without loss of money or time.
• Liquidity - An investment which is easily saleable or marketable without loss of money and without loss of time is said to possess liquidity
• OBJECTIVES OF INVESTORS

  1.Maximization of return 2.Minimization of risk 3.Hedge against inflation
• TYPES OF INVESTORS:

  1.RISK-AVERSE INVESTORS (BULLS AND CHICKEN)

  2. RISK-TAKER INVESTORS (BEARS AND PIGS)-

  3. RISK-NEUTRAL INVESTORS-
• RISK-AVERSE INVESTORS (BULLS AND CHICKEN)- They are the type of investors who, when faced with two investment alternatives with equal returns but one is riskier than the other, will choose the less risky investment.
• RISK-TAKER INVESTORS (BEARS AND PIGS)- They are the investors who are ready to pay a higher price for an investment regardless of the risks involved
• RISK-NEUTRAL INVESTORS- They are the investors who do not take into account the risks involved in investment and who are focused only on the expected returns
• FINANCIAL MARKETS

  Financial markets are structures through which funds flow. They are the institutions and systems that facilitate transactions in all types of financial claim
• FINANCIAL MARKET

  an arrangement or institution where the traders

  are involved in the buying and selling of financial assets like shares, bonds, derivatives, commodities, currencies, etc.
• FINANCIAL MARKET

  play a critical role in the accumulation of capital and the production of goods and services. The price of credit and returns on investment provide signals to producers and consumers—the
• PRIMARY- It is a market in which users of funds raise funds through issues of financial instruments such as stocks and bonds.
• The primary market is a segment of the capital market where entities such as companies, governments and other institutions obtain funds through the sale of debt and equity-based securities
• SECONDARY- It is where securities can be bought and sold after they have been issued to the public in the primary market.
• SECONDARY Exists for the purpose of marketability
• MONEY MARKET- Money markets cover markets for short-term debt instruments, usually issued by companies with high credit standing. They consist of a network of institutions and facilities for trading debt securities with a maturity of one year or less
• Repurchase agreement - It is the rate at which the central bank of a country lends money to commercial banks in the event of any shortfall of funds.
• Government Securities Treasury Bills – Mature in less than a year Treasury Bonds – Mature Beyond 1 year
• Eurodollar Certificates - A certificate of deposit paying interest and principal in dollars, but issued by a bank outside the United States, usually in Europe.
• CAPITAL MARKETS For long term securities
• Debt Securities: Notes, Bonds, Mortgages, Leases
• Equity Securities: Stocks
• Securities Market – A financial instrument that is fungible and negotiable and has some kind of monetary worth and allows securities to be traded anonymously
• Negotiated market – A sort of secondary exchange where buyers and sellers negotiate over the values of each securities.
• Stock Market for equity or stock securities – The term “Stock Market” refers to a number of exchanges that deal with equity securities and allow for the buying and selling of shares of publicly traded firms
• Bond Market – The term bond market broadly refers to a market where investors can purchase debt instruments that are offered by either firms or governments.
• Derivative Securities Market – A financial instrument whose value is based on the value of another asset
• Loan Market - Where one-on-one transaction takes place between a borrower and a lender
• Mortgage Market - The borrower agrees to make periodic payments to the lender, usually in the form of a series of regular installments that are split into principal and interest. The property then acts as security for the loan.
• Lease Market - The conditions under which one party agrees to rent an asset-in this case, property-owned by another party are outlined in a lease
• Asset Allocation - is the process of deciding how to distribute an investor’s wealth among different countries and asset classes for investment purposes.
• The preliminaries - Before embarking on an investment program, we need to make sure other needs are satisfied.
• Insurance - Life insurance should be a component of any financial plan. Life insurance protects loved ones against financial hardship should death occur before our financial goals are met.
• Term Life Insurance - Term life insurance provides only a death benefit; the premium to purchase the insurance changes every renewal period.
• Universal and Variable Life Policies - Universal and variable life policies, although technically different from each other, are similar in that they each provide both a death benefit and a savings plan to the insured.
• Cash Reserve - Emergencies, job layoffs, and unforeseen expenses happen, and good investment opportunities emerge.
• Accumulation Phase - Individuals in the early to middle years of their working careers are in the accumulation phase.
• Consolidation Phase - Individuals in the consolidation phase are typically past the midpoint of their careers, have paid off much or all of their outstanding debts, and perhaps have paid, or have the assets to pay, their children’s college bills