文档介绍：What is an Investment
“An Investment is the current commitment of money or other resources in the expectation of reaping future benefits”
Real Assets Versus Financial Assets
Real Assets
Assets used to produce goods and services (land, buildings, machine, knowledge or patents etc.)
Financial Assets
Claims on real assets (Stocks, Bonds etc.)
The success and failure of financial assets we choose to purchase ultimately depend on the performance of the underlying real assets
Types Financial Assets
Fixed income or debt
Money market instruments
Bank certificates of deposit
Capital market instruments
Bonds
Common stock or equity
Derivative securities
Allocation vs. Selection
Asset allocation
Choice among broad asset classes
Choice of sector within a particular asset class
Security selection
Choice of which securities to hold within asset class
Active vs. Passive Management
Active Management
Finding mispriced securities
Timing the market
Passive Management
No attempt to find undervalued securities
No attempt to time the market
Holding a highly diversified portfolio
Risk and Return Trade-off
“No-Free Lunch Proposition”
Primary vs. Secondary Market
New issues of securities are offered to the public in the primary market. IPOs – Initial Public Offerings
Previously issued securities are then traded in the secondary market
Market Trends
American Depository Receipts (ADRs)
Foreign securities offered in dollars
Mutual funds that invest internationally
Instruments and vehicles continue to develop (WEBs)
Exchange Traded Funds (ETFs)
Recent Trends—Securitization
Mortgage pass-through securities
Other pass-through arrangements
Car, student, home equity, credit card loans
Offers opportunities for investors and originators
Recent Trends—Financial Engineering
Use of mathematical models and computer-based trading technology to synthesize new financial products
Bundling and unbundling of cash flows