Investment Analysis - Summary - Tilburg university - MSc Finance
66 views 2 purchases
Course
Investment Analysis
Institution
Tilburg University (UVT)
Book
Investments
Instagram: ECOsummaries DM me for 20% discount!
Summary for the course 'Advanced Corporate Finance'. This summary was written in order to study for the final. Everything you need to know is available in this summary.
Instagram: ECOsummaries DM me for 20% discount!
,Week 1 – investment environment, trading securities, financial crisis & funds
Investment environment
Assets:
Real assets: used to produce goods/services (land, building, machines)
Financial assets: claim on real assets (stocks/bonds)
Indifference curves:
- Points on different curves yield the same utility, you
must look at the most rightwards function to get the
optimal.
- Point D gives the highest utility
Investment process:
Asset allocation: choosing whether to invest in bonds, ETFs, stocks, etc.
Security selection: choosing what specific securities to choose within the asset class of bonds,
ETFs, stocks, etc.
Top-down: asset allocation → pick securities
Bottom up: pick securities without much concern for asset allocation
Active management: finding securities handpicked and ‘timing’ the market.
→ Higher trading and management costs
Passive management: highly diversified portfolio without ‘timing’ the market (ETFs).
→ Lower trading and management costs
Players in the field:
Investment banks: perform services for firms (IPO), handle marketing of securities in primary
market, seasonal equity offering (SEO): done by existing publicly traded firms to raise extra
equity.
Venture capital: management and investing of start-ups.
Private equity: investment in not publicly traded firms.
3
, Financial markets:
Money markets: short term, liquid, low risk
- Treasury bills
- Euro / dollars
- Certificates of deposits
- LIBOR: short-term interest rate in Euro money market
- Etc.
Bond market:
- Treasury notes and bonds
- Corporate bonds
- Municipal bonds
- Mortgage securities
- Federal agency debt
Capital markets: long term, riskier
- Common stock:
* Voting rights, residual claim to assets/income, limited liability, dividend + capital gains
- Preferred stock:
* No voting rights, fixed amount of income, obligation to pay interest but not dividend.
Derivative markets: trading of derivative assets
- Derivative asset: claim whose value is contingent on the value of underlying asset.
* Options: right to buy/sell, purchased, only exercise when profitable
* Futures: obligation to buy/sell, entered without purchasing, obligation to buy/sell at futures
prices.
4
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller ecosummaries. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $7.11. You're not tied to anything after your purchase.
