文档介绍：Chapter 22
Investors and the Investment Process
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McGraw-Hill/Irwin
The Investment Management Process
Overview of the Investment Process
Investor Objectives
Specifying Objectives: Individual Investors
Balance risk and return throughout your life
As you age your wealth shifts from human capital to financial capital, increasing the importance of portfolio choice.
Life Cycle is critical to the process of determining the risk/return trade-off
Younger investors
Willing to bear more risk for higher returns
Older investors
Willing to accept lower returns for lower risk
Specifying Objectives: Professional Investors
Personal Trusts
An interest in an asset held by a trustee for the benefit of another person.
Management is subject to prudent investor rules
Mutual Funds
Varies with type of fund
Detailed in the prospectus
Specifying Objectives: Professional Investors (cont.)
Pension Funds
Defined benefit: Retirement benefit depends on years with the firm and salary. Investment risk is borne by pany.
Defined contribution: Employee and employer contribute a set amount to the individual’s retirement fund, but retirement benefit depends on investment performance. Investment risk is borne by the individual.
Endowment Funds
Gifts to nonprofits that are invested
Funds from the endowment used by the nonprofit
Specifying Objectives: panies
Life panies
Term insurance,
Whole life policies (insurance + savings at fixed rate)
Variations of the two with variable rate savings,
Investments are set up as hedges against potential claims of policy holders.
Non-Life panies
Invest premiums not paid back to policyholders for losses,
Hedge against potential claims