Manajemen Investasi

INVESTMENTS:INVESTMENTS:Analysis and ManagementAnalysis and Management

Third Canadian EditionThird Canadian Edition

W. Sean ClearyCharles P. Jones

Prepared by Khalil Torabzadeh

University of Lethbridge

Chapter 1Chapter 1

Understanding Understanding InvestmentsInvestments

Cleary Jones/Investments: Analysis and Management, 3rd Canadian Edition, Chapter 1

Learning ObjectivesLearning Objectives

• Define investment and discuss what it means to study investments.

• Explain why risk and return are the two critical components of all investing decisions.

• Outline the two-step investment decision process.

• Discuss key factors that affect the investment decision process.

Investments DefinedInvestments Defined

• Investments is the study of the process of committing funds to one or more assets. Emphasis is on holding marketable securities. Concepts apply to financial assets and real

assets within domestic as well as international markets.


Investment ObjectivesInvestment Objectives

• Primary Objectives Safety of principal Income Growth of capital

• Secondary Objectives Liquidity Tax minimization


Investment ConstraintsInvestment Constraints

• Possible constraints for investors include: Legal Moral/ethical Emotional – including investment knowledge and

risk tolerance Basic minimum income to be provided by the

portfolio Realism – an understanding that some objectives

are unrealistic (e.g., high returns with low risk) Other (e.g., illness, pending divorce, etc.)


Primary and Secondary ObjectivesPrimary and Secondary Objectives

• Objectives and constraints must be related to the three primary investment objectives of safety, income, and growth, and to the secondary objectives of liquidity and tax minimization. The importance of safety relates to: risk, market

timing, inflation, return, and emotion The importance of income relates to: taxation, return,

risk, inflation, and basic minimum income The importance of growth relates to: taxation, risk,

return, market timing, and emotional considerations


Why Study Investments?Why Study Investments?

• Most individuals make investment decisions sometime Individuals need sound framework for

managing and increasing wealth

• Essential part of a career in the field Security analyst, portfolio manager, investment

advisor, financial planner, Chartered Financial Analyst


• Underlying investment decisions: the tradeoff between expected return and risk

• Return: expected return is not usually the same as realized return

• Risk: the possibility that the realized return will be different than the expected return

Investment DecisionsInvestment Decisions


• Any level of expected return and risk can be attained

• The expected return (ER) must be large enough to compensate for taking additional risk

ER

Risk-free Rate

Bonds

Stocks

The Tradeoff Between ER and RiskThe Tradeoff Between ER and Risk

Risk


““Typical” ChartTypical” Chart


• Two-step process: Security analysis

• Necessary to understand security characteristics and applied to these securities to estimate their price or value

Portfolio management• Selected securities viewed as a single unit• How and when should it be revised?• How should portfolio performance be measured?

The Investment Decision ProcessThe Investment Decision Process


• Uncertainty in ex post returns dominates decision process Future unknown and must be estimated

• Foreign financial assets – opportunity to enhance return and/or reduce risk

• Investors must now cope with a changed investing environment

• Internet changes investments environment

• Institutional investors are important• How efficient are financial markets in processing

new information?

Factors Affecting the ProcessFactors Affecting the Process


Main issues:• The accountability of the Board of Directors and

Management

• A re-examination of accounting and auditing practices

• Management compensation arrangements such as executive stock option plans

• Disclosure requirements

• The effectiveness of existing regulatory bodies

Corporate GovernanceCorporate Governance


• Individuals who are interested in the investment area should consider seeking a CFA ® designation

• The CFA institute administers the Chartered Financial Analyst ® curriculum and examination program

Level I emphasizes tools and inputs Level II emphasizes asset valuation Level III emphasizes portfolio management• For more information: www.cfainstitute.org

Appendix 1A: The Chartered Financial Appendix 1A: The Chartered Financial AnalystAnalyst®® (CFA (CFA®®)) Program Program


http://www.cfainstitute.org/

• Canadian Securities Institute (CSI) The CSI offers the Canadian Securities Course (CSC),

which is a mandatory requirement for individuals who wish to become licensed to sell financial securities in Canada and to register to sell mutual funds

Appendix 1B:Appendix 1B:The Canadian Securities Institute (CSI)The Canadian Securities Institute (CSI)


Copyright © 2009 John Wiley & Sons Canada, Ltd. All rights reserved. Reproduction or translation of this work beyond that permitted by Access Copyright (The Canadian Copyright Licensing Agency) is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons Canada, Ltd. The purchaser may make back-up copies for his or her own use only and not for distribution or resale. The author and the publisher assume no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information contained herein.

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Manajemen Investasi