1. 1 Submit To :Rutvi Sarang Prepared BY : Roll No : 3 Dipak S Bhayani Roll No : 3 Dipak S Bhayani

2. 2 Investment Process Investment Policy AnalysisValuation Portfolio Construction Portfolio Evaluation Investible Fund, Objective knowledge Investible Fund, Objective knowledge Market Industry Company Market Industry Company Intrinsic value Future value Intrinsic value Future value Diversifica tion - Selection & Allocation Diversifica tion - Selection & Allocation -Appraisal - Revision -Appraisal - Revision

3. 1. Investment Policy Investible Funds: The entire investment Procedure revolves around availability of funds. Generating through savings and borrowings. Extra careful in the case of selection of investment alternatives, if funds are borrowed. interest pays is more than return

4.  Objectives They should be framed on the premises of required rate of return, need for liquidity, safety of principal and regular income. Risk takers objective should be high rate of return in the form of capital appreciation. Primary objective of risk averse is the safety of principal.

5. Knowledge Know. About investment alternative and market plays an imp role in the policy formulation. Investment alternative ranges from security to real estate. Risk and return associated with inv alt differ from each other. E.g. investment in equity is high yielding but more risk than fixed income securities. Tax sheltered schemes offer tax benefits to investors.

6. Awareness of stock market structure and broker charges. Mode of operation varies among BSE, NSE and OTCEI. Brokerage charges are also changes.

7. 2. Security Analysis  Market Analysis The growth in GDP and inflation are reflected in stock prices. The recession in the economy results in a bear market. The stock prices may be fluctuating in the short run but in the long run they move in trends i.e. either upwards or downwards.

8. Industry Analysis The industries that contribute to the output of the major segments of the economy vary in their growth rates and overall contribution to eco activity. Some industry grow faster than the GDP and are expected to continue in their growth. E.g IT industry has experienced higher growth rate than GDP in 1998.

9. Company Analysis CA is to help to investor for make better decisions. Company’s earnings, profitability, operating efficiency, capital structure and mgmt have to be screened. These factors have direct bearing on the stock prices and return of the investors. Company with a high product market share is able to create wealth to the investors in the form of capital appreciation.

10. 3. Valuation Valuation helps in determining risk-return expected from an investment in common stock

11.  Intrinsic value:  Can be measured through book value of the share and price earning ratio.  The real worth of share is compared with the market price and then inv decision are made.  Future value F.V of securities can be measured through simple statistical technique like trend analysis. It helps to predict future value.

12. 4.Construction of Portfolio Its combination of securities and its for to meet investor’s goals and objectives. Max return and min risk. 4(a) Diversification: Objective is reducing a risk in loss of capital and income Diversified portfolio is less risky then single portfolio.

13. 4(a.1).Industry diversification Industries’ growth and their reaction to govt policies are different. Banking industry gives high return but limited capital appericial. IT gives high return and high cap app but growth potential after 2002 is not predictable.

14. 4(a.2).Company diversification Securities from different companies are purchased to reduce risk. 4(B). Selection: Funds are allocates for the selected secu. Selection of secu and the allocation of funds and seals the construction of portfolio

15. 5. Evaluation 5(a). Appraisal The return and risk performance of the security vary time to time. It should be measured and compared.

16. 16 5(b). Revision Depend on result of the appraisal Low yielding secu with high risk are replaced with high yielding secu with low risk factor. Keep the return at particular level investor to revise the components of the portfolio predictably.

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