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Module Assessment

The document outlines key considerations for investment over a three-year holding period, including investment objectives, available funds, and types of investment vehicles. It differentiates between direct and indirect investing, emphasizing the importance of understanding risk and return characteristics of various financial instruments. Additionally, it describes a five-step investment management process to guide decision-making in the investment environment.

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Nova Babaylo
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7 views

Module Assessment

The document outlines key considerations for investment over a three-year holding period, including investment objectives, available funds, and types of investment vehicles. It differentiates between direct and indirect investing, emphasizing the importance of understanding risk and return characteristics of various financial instruments. Additionally, it describes a five-step investment management process to guide decision-making in the investment environment.

Uploaded by

Nova Babaylo
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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MODULE ASSESSMENT

Name : __________________________ Score : ___________

Year & Section: _________________________ Date : ___________

Answer the following questions:

Think about your investment possibilities for 3 years holding period in real investment environment.

1. What could be your investment objectives?


2. What amount of funds you could invest for 3 years period?
3. What investment vehicles could you use for investment? (What types of investment vehicles
are available in your investment environment?)
4. What type(-es) of investment vehicles would be relevant to you? Why?
5. What factors would be critical for your investment decision making in this particular
investment environment?
SUMMARY

The common target of investment activities is to


“employ” the money (funds) during the time period seeking to
enhance the investor’s wealth. By foregoing consumption today
and investing their savings, investors expect to enhance their
future consumption possibilities by increasing their wealth.

Corporate finance area of studies and practice involves


the interaction between firms and financial markets and
Investments area of studies and practice involves the interaction between investors and financial
markets. Both Corporate Finance and Investments are built upon a common set of financial principles,
such as the present value, the future value, the cost of capital). And very often investment and
financing analysis for decision making use the same tools, but the interpretation of the results from
this analysis for the investor and for the financier would be different.

Direct investing is realized using financial markets and indirect investing involves financial
intermediaries. The primary difference between these two types of investing is that applying direct
investing investors buy and sell financial assets and manage individual investment portfolio
themselves; contrary, using indirect type of investing investors are buying or selling financial
instruments of financial intermediaries (financial institutions) which invest large pools of funds in the
financial markets and hold portfolios. Indirect investing relieves investors from making decisions
about their portfolio.

Investment environment can be defined as the existing investment vehicles in the market
available for investor and the places for transactions with these investment vehicles.

The most important characteristics of investment vehicles on which bases the overall variety
of investment vehicles can be assorted are the return on investment and the risk which is defined as
the uncertainty about the actual return that will be earned on an investment. Each type of investment
vehicles could be characterized by certain level of profitability and risk because of the specifics of
these financial instruments. The main types of financial investment vehicles are: short- term
investment vehicles; fixed-income securities; common stock; speculative investment vehicles; other
investment tools.

Financial market, in which only short-term financial instruments are traded, is Money market,
and financial market in which only long-term financial instruments are traded is Capital market.

The investment management process describes how an investor should go about making
decisions. Investment management process can be disclosed by five-step procedure, which includes
following stages: (1) setting of investment policy; (2) analysis and evaluation of investment vehicles;
(3) formation of diversified investment portfolio; (4) portfolio revision; (5) measurement and
evaluation of portfolio performance.
REFERENCE:

Black, John, Nigar Hachimzade, Gareth Myles (2009). Oxford Dictionary of


Economics. 3rd ed. Oxford University Press Inc., New York.

Bode, Zvi, Alex Kane, Alan J. Marcus (2005). Investments. 6th ed. McGraw Hill.

Francis, Jack C., Roger Ibbotson (2002). Investments: A Global Perspective.


Prentice Hall Inc.

Haan, Jakob, Sander Oosterloo, Dirk Schoenmaker (2009).European Financial


Markets and Institutions. Cambridge University Press.

Jones, Charles P. (2010). Investments Principles and Concepts. John Wiley & Sons,
Inc

Levy, Haim, Thierry Post (2005). Investments. FT / Prentice Hall.

Read more: https://www.referenceforbusiness.com/small/Eq-


Inc/Finance-and-Financial-Management.html#ixzz6kttVPSPm

Congratulations student! You really made it to


the end! Job well done! Rest and relax a while
then move on to the next module. God bless.

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