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Chapter 2 INVESTMENT ALTERNATIVES Choices Galore

Chapter 2 INVESTMENT ALTERNATIVES Choices Galore. OUTLINE Non-marketable Financial Assets Money Market Instruments Bonds or Fixed Income Securities Equity Shares Mutual Fund Schemes Financial Derivatives Life Insurance Real Estate Precious Objects.

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Chapter 2 INVESTMENT ALTERNATIVES Choices Galore

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  1. Chapter 2 INVESTMENT ALTERNATIVES Choices Galore

  2. OUTLINE • Non-marketable Financial Assets • Money Market Instruments • Bonds or Fixed Income Securities • Equity Shares • Mutual Fund Schemes • Financial Derivatives • Life Insurance • Real Estate • Precious Objects

  3. NON-MARKETABLE FINANCIAL ASSETS • BANK DEPOSITS • POST OFFICE TIME DEPOSITS (POTDs) • MONTHLY INCOME SCHEME OF THE POST OFFICE (MISPO) • KISAN VIKAS PATRA (KVP) • NATIONAL SAVINGS CERTIFICATE • COMPANY DEPOSITS • EMPLOYEES PROVIDENT FUND SCHEME • PUBLIC PROVIDENT FUND SCHEME

  4. MONEY MARKETINSTRUMENTS • TREASURY BILLS • CERTIFICATES OF DEPOSITS • COMMERCIAL PAPER • REPOS

  5. BONDS OR FIXED INCOME SECURITIES • Government Securities • Savings Bonds • Private Sector Debentures • PSU Bonds • Preference Shares

  6. EQUITY SHARES • TERMINOLOGY • RIGHTS OF EQUITY SHAREHOLDERS • STOCK MARKET CLASSIFICATION OF EQUITY • SHARES • PETER LYNCH’S CLASSIFICATION

  7. CLASSIFICATION OF EQUITY SHARES • • BLUE-CHIP SHARES • GROWTH SHARES • INCOME SHARES • CYCLICAL SHARES • DEFENSIVE SHARES • SPECULATIVE SHARES • PETER LYNCH’S CLASSIFICATION OF COMPANIES • SLOW GROWERS • STALWARTS • FAST GROWERS • CYCLICALS • TURNAROUNDS • ASSET PLAYS

  8. MUTUAL FUND SCHEMES • Equity Schemes • Balanced Schemes • Debt Schemes • Regulation • Pros and Cons

  9. FINANCIAL DERIVATIVES A derivative is an instruments whose value depends on the value of some underlying asset. Futures A futures contract is an agreement between two parties to exchange an asset for cash at a predetermined future date for a price that is specified today. Options An option gives its owner the right to buy or sell an underlying asset on or before a given date at a predetermined price.

  10. INSURANCE POLICIES • Endowment Assurance • Money Back Plan • Whole Life Assurance • Unit Linked Plan • Term Assurance • Immediate Annuity • Deferred Annuity

  11. REAL ESTATE • Residential House • Sources of Housing Finance • Features of Housing Loans • Guidelines for Buying a Flat • Commercial Property • Agricultural Land • Suburban Land • Time Share in a Holiday Resort

  12. PRECIOUS OBJECTS • Gold and Silver • Precious Stones • Art Objects

  13. SUMMING UP • The bewildering range of investment alternatives fall into • two broad categories, viz., financial assets and real assets. • A good portion of the financial assets of individual • investors is held in the form of non-marketable financial • assets such as bank deposits. • debt instruments which have a maturity of less than one • year at the time of issue are called money market • instruments. • Bonds or debenture represent long-term debt instruments. • Preference shares represent a hybrid security • Equity shares represent ownership capital

  14. A mutual fund represents a vehicle for collective • investment. Mutual fund schemes are broadly classified as • equity schemes, balanced schemes, and debt schemes. • Futures and options are the two most important financial • derivatives. • Endowment assurance policy, money back policy, whole • life policy, unit linked plan, and term policy are popular • life insurance policies in India • As a category, real estate is an attractive investment • proposition. • Precious objects are items that are generally small in size • but highly valuable in monetary terms.

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