Scribd Logo
Upload

Welcome to Scribd!

  • 6 views

    Active Strategies: Strategic Investment

    Uploaded by

    Amna Nawaz
    Active bond strategies involve swapping bonds to take advantage of expected market changes to seek higher returns or maintain portfolio value, while passive strategies focus on matching cash flows to liabilities with lower transaction costs. Pension funds and insurers extensively use passive strategies like bond immunization and cash flow matching. Strategic investments are transactions between companies to serve shared goals, where one company invests in another and they enter agreements to boost competitive advantages through projects like joint ventures, supply contracts, or research partnerships.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Active Strategies: Strategic Investment

    Uploaded by

    Amna Nawaz
    6 views1 page
    Active bond strategies involve swapping bonds to take advantage of expected market changes to seek higher returns or maintain portfolio value, while passive strategies focus on matching cash flows to liabilities with lower transaction costs. Pension funds and insurers extensively use passive strategies like bond immunization and cash flow matching. Strategic investments are transactions between companies to serve shared goals, where one company invests in another and they enter agreements to boost competitive advantages through projects like joint ventures, supply contracts, or research partnerships.

    Original Description:

    Strategic Investment

    Original Title

    Investment Strategis

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Active bond strategies involve swapping bonds to take advantage of expected market changes to seek higher returns or maintain portfolio value, while passive strategies focus on matching cash flows to liabilities with lower transaction costs. Pension funds and insurers extensively use passive strategies like bond immunization and cash flow matching. Strategic investments are transactions between companies to serve shared goals, where one company invests in another and they enter agreements to boost competitive advantages through projects like joint ventures, supply contracts, or research partnerships.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    6 views1 page

    Active Strategies: Strategic Investment

    Uploaded by

    Amna Nawaz
    Active bond strategies involve swapping bonds to take advantage of expected market changes to seek higher returns or maintain portfolio value, while passive strategies focus on matching cash flows to liabilities with lower transaction costs. Pension funds and insurers extensively use passive strategies like bond immunization and cash flow matching. Strategic investments are transactions between companies to serve shared goals, where one company invests in another and they enter agreements to boost competitive advantages through projects like joint ventures, supply contracts, or research partnerships.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    Active strategies usually involve bond swaps, liquidating one group of bonds to purchase

    another group, to take advantage of expected changes in the bond market, either to seek higher
    returns or to maintain the value of a portfolio. Active strategies are used to take advantage of
    expected changes in interest rates, yield curve shifts, and changes in the credit ratings of
    individual issuers.

    Passive strategies are used, not so much to maximize returns, but to earn a good return while
    matching cash flows to expected liabilities or, as in indexing, to minimize transaction and
    management costs. Pension funds, banks, and insurance companies use passive strategies
    extensively to match their income with their expected payouts, especially bond immunization
    strategies and cash flow matching. Generally, the bonds are purchased to achieve a specific
    investment objective; thereafter, the bond portfolio is monitored and adjusted as needed.

    Strategic Investment
    A strategic investment is a transaction that is closely related to joint ventures. In strategic
    investments, one company makes an investment in another. These two companies enter into
    agreements that are designed to serve shared business goals.
    How is Strategic Investment Done?
    Strategic investment begins with identifying and evaluating various projects and making a
    selection that is likely to boost the companys competitive advantage.
    In a strategic investment, the investor generally acquires common or preferred stocks in the
    target company. A loan may also be taken for acquiring the debt securities of the target company.
    Moreover, the two companies may enter into supply and sourcing contracts, technology sharing
    agreements or research and development agreements. They may also form separate joint venture
    entities for engaging in specified businesses.

    You might also like