Scribd
Upload
227 views8 pages

Charles P. Jones, Investments: Analysis and Management, Tenth Edition, John Wiley & Sons Prepared by G.D. Koppenhaver, Iowa State University

This document provides an overview of the topics that will be covered in Chapter 1 of the investments textbook. The chapter objectives are to understand the current investments field, help readers make investment decisions, and set realistic expectations. It introduces key concepts like the tradeoff between risk and return, the costs of managing risk, and the two-step process of security analysis and portfolio management. It also notes the importance of adjusting to changes in markets and opportunities like foreign assets.

Uploaded by

Febria Nathania
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
227 views8 pages

Charles P. Jones, Investments: Analysis and Management, Tenth Edition, John Wiley & Sons Prepared by G.D. Koppenhaver, Iowa State University

This document provides an overview of the topics that will be covered in Chapter 1 of the investments textbook. The chapter objectives are to understand the current investments field, help readers make investment decisions, and set realistic expectations. It introduces key concepts like the tradeoff between risk and return, the costs of managing risk, and the two-step process of security analysis and portfolio management. It also notes the importance of adjusting to changes in markets and opportunities like foreign assets.

Uploaded by

Febria Nathania
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 8

Chapter 1

Charles P. Jones, Investments: Analysis and Management,


Tenth Edition, John Wiley & Sons
Prepared by
G.D. Koppenhaver, Iowa State University

1-
1
Objectives
 To understand the investments field as
currently practiced
 To help you make investment decisions that
will enhance your economic welfare
 To create realistic expectations about the
outcome of investment decisions

1-
2
 Investments is the study of the process of
committing funds to one or more assets
◦ Emphasis on holding financial assets and
marketable securities
◦ Concepts also apply to real assets
◦ Foreign financial assets should not be ignored

1-
3
 Most individuals make investment decisions
sometime
◦ Need sound framework for managing and
increasing wealth
 Essential part of a career in the field
◦ Security analyst, portfolio manager, registered
representative, Certified Financial Planner,
Chartered Financial Analyst

1-
4
 Underlying investment decisions: the tradeoff
between expected return and risk
◦ Expected return is not usually the same as realized
return
 Risk: the possibility that the realized return
will be different than the expected return
◦ Investor risk tolerance affects expected return

1-
5
 Investors manage
risk at a cost - lower
expected returns (ER)
 Any level of expected Stocks
return and risk can ER Bonds
be attained

Risk-free Rate
Risk

1-
6
 Two-step process:
◦ Security analysis and valuation
 Necessary to understand security characteristics
◦ Portfolio management
 Selected securities viewed as a single unit
 How efficient are financial markets in processing new
information?
 How and when should it be revised?
 How should portfolio performance be measured?

1-
7
 Uncertainty in ex post returns dominates
decision process
◦ Future unknown and must be estimated
 Foreign financial assets: opportunity to
enhance return or reduce risk
 Quick adjustments needed to a changing
environment
 The Internet and investment opportunities
 Institutional investors important

1-
8

You might also like