Portfolio Construction – Traditional & Modern Approach

Portfolio construction refers to a process of selecting the optimum mix of securities for the purpose of achieving maximum returns by taking minimum risk. A portfolio is a combination of various securities such as stocks, bonds and money market instruments. Diversification of investments helps in spreading risk over many assets; hence one must diversify securities in the portfolio to create […]

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Derivatives Market – Option, Futures, Forwards

A derivatives market is a market where derivatives are bought and sold by investors. Derivative A derivative is a financial contract, the value of which, is derived from an underlying asset (share, commodity, currency, security etc.). If the value of underlying asset declines the value of the derivative also decreases and vice versa. Options An option is a right, but not […]

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Fundamental Analysis – Economic, Industrial & Company Factors

An investor conducts fundamental analysis and technical analysis to predict the future price movements of securities by analyzing the Economic factors, Industrial factors and Company specific factors.  Various economic, industrial and company specific factors can have a direct bearing on prices of securities. A fundamental analysis helps an investor to understand the general behaviour of the market, industry or a company and […]

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Technical Analysis – Dow Theory, Trends, Indicators

Technical analysis is conduct by an analyst to study the price movements of stocks in the security market. An investor buys securities when there is an upward price movement and sells securities when there is a downward price movement. Technical Analysis is the process of identifying trend reversals at an earliest stage to formulate the buying and selling strategy with […]

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Risk – Causes, Systematic & Unsystematic Risk, Types

Risk – It refers to the degree or probability of loss in the future. Causes of Risk Wrong decision or Wrong timing Term of Investment – Long term investments are more risky than short-term investments as future is uncertain. Level of Investment – Higher the quantum of investment the higher is the risk. Nature of Industry – Risk is higher […]

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Investment Alternatives – Negotiable and Non-negotiable Instruments

Investment refers to employment of funds on assets with the aim of earning income or capital appreciation.It is essentially a sacrifice of current money or other resources for future benefits.There are various Investment Alternatives available with an investor. An investor has to carefully choose between different investment alternatives like negotiable securities (Can be freely traded in the market) and non-negotiable securities(cannot […]

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What are Securities & Types of Securities

Securities refer to an investment that can be freely traded in the market and provides a right or claim on an asset and all future cash flows generated by that asset. According to Securities Contracts Regulation Act, 1956, “securities include shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or […]

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