First we must as an individual investor consider the timeframe of the investment, the level of acceptable risk that an individual is willing to undertake and how this will translate to building their ideal investment portfolio. One must become familiar with the intricacies of each financial instrument in order to determine the best way to implement this type of investment in a well diversified portfolio and their individual risk profile. Afterwards we can estimate what the overall effect of this financial instrument will be in the overall risk level of the whole portfolio and how it can suit a particular kind of potential investor. Financial instruments are divided in different classes depending on their financial characteristics, risk levels, and maturity. For financial investments an individual can choose to invest directly in a variety of financial instruments or indirectly through the use of investment companies such as a mutual fund. Direct Investment alternatives available to build a well diversified investment portfolio are: Non Marketable Securities- Non marketable securities consist of Savings Deposits, Certificates of Deposit, Money Market Deposit accounts and U.S. Savings Bonds. Saving Accounts and Certificates of Deposit are two of the most popular and widely used financial instruments. They are issued by commercial banks, thrift and credit unions (Madura, 1992). These types of deposits pay a fixed interest rate and in the case of Certificates of Deposit they pay higher interest rates with longer maturity periods and are only redeemable after maturity is due. Although they don’t earn high returns, they are very popular due to their low risk and being virtually risk free up to $100,000 since they are insured by the FDIC. Money Market Deposit accounts are issued by financial institutions and are also insured by the FDIC up to $100,000.These type of accounts pay the typical Money Market interest rate with a minimum deposit to open required. Money Market Securities These types of financial instruments include short-term, highly liquid and relatively low-risk investments that are sold by governments, financial institutions and by corporations with idle funds looking to invest. These types of transactions are typically of $100,000 and are bought by money market mutual funds, but are sometimes traded in the open market. Their maturity period ranges from one day to typically no more than 90 days. Most of the securities in the money market are used by financial institutions and banks and large commercial customers. The Treasury bill is considered one of the safest investments by the international investor community. It is one of the most important financial securities and considered the benchmark. It has been traditionally considered a risk-free financial asset since there is no practical risk of the U.S. government defaulting on its debt. Risk averse European investors often seek the security associated with investing in Treasury
Part I As an individual investor there are a variety of factors that one must take into consideration when choosing to build a well diversified targeted investment portfolio that best suits the financial objectives of the individual investor. In order to match the right investment profile that best suits their financial objectives we must take into consideration the time span of their investment window and their investment goals, the investor’s level of “risk aversion” or how much of a potential higher financial return an investor requires in order to assume the risk of the investment, the types of financial instruments available to the individual investor that best suit their financial…
According to the paper one past strategy that Philip Capital has to consider in the future too is Going Global on its investment. Before getting into the other strategies, some of the challenges and opportunities in the present and for the future markets can be analysed. 2011 is going to be a challenging environment for investors all over the world.
Treynor ratio refers to a measure of excess returns that can be obtained from a given investment operating under a risk free rate. Treynor ratio utilizes beta rather than standard deviation when determining portfolio returns. Therefore, Treynor ratio assumes that relevant risk is systematic whereby; the inherent risk can not be diversified through portfolio management (Anric, 2013).
Morris Capital allows the investors to withdraw the money after five years. Though this may seem to be an advantage to the investors, it is not of much use to the company. The reason is, long term investments will be of more benefit to the company when compared to these
le that best suits their financial objectives we must take into consideration the time span of their investment window and their investment goals, the investor’s level of “risk aversion” or how much of a potential higher financial return an investor requires in order to
The overall objective of this investment analysis is to long the asset at cheap (by identifying when the stock is undervalued) and then it short it when it reaches target price with the objective of making profit. Markets are made of people and
It is evident that the performance of the stocks is better, but performs dismally compared to other stocks. I checked the portfolio seeing if there are any rebalancing needs that need to be done. I looked at the