Notes de cours
College aantekeningen Investment Analysis (323060-M-6)
- Cours
- Établissement
- Book
Lecture notes Investment Analysis
[Montrer plus]
Livre connecté
Titre de l’ouvrage:
Auteur(s):
- Édition:
- ISBN:
- Édition:
Plus de résumés pour
-
All lectures + sidenotes Investments
-
Investment Management Summary
-
Investment Management Chapter Assignments
1 vérifier
Par: wardstolk • 2 année de cela
Vendeur
S'abonnertessbremer
Avis reçus
Aperçu du contenu
Investment analysisLecture 1
Pension fund: example of investment, you reduce consumption now to consume it later in the future
Financial markets and the economy:
- Informational role; allocation of capital resources
- Consumption timing
o 2 periods, each period income $10,000 – saving and borrowing possible at 5%
interest rate. (in notebook)
o It is possible to spend 4k in p1 and 12k in p2? Yes! Save and earn interest. However,
pareto optimal – you have some money left.
optimal pair of consumption: on the line.
o Which point depends on your personal preferences – utility function, indifference
curves (everywhere along the same curve the investor is assumed to be equally
happy)
- Allocation of risks
- Separation of ownership and management (when it’s listed on stock exchange)
o Shareholders are in control and hire managers
o Agency problem; the shareholders want to maximize the value of the firm, but a
manager might want something else – they want to use the corporate jet
o You can promise the manager shares so they act to maximize the firm value as well –
page 7 in the book states an example this can create an agency problem again
Code tabaksblat – tighten the rules of corporate governance
Now there is a fear of being taken over by foreign companies – other behavior of managers now.
Indifference curves
Change from I1 to I4 happiness level in i1 is higher than i4
Assume you spend only a little in period 1 (yellow), you’ll need to spend a lot in period 2 to reach the
highest utility (point A is very high). If you spend plenty in period 1 (blue), it will be easier to reach
point C (same indifference curve, so as good as A) time value of money is involved!
, you want to be on i0 or i1 but there is no
consumption pair possible. i2 point D is the best for this person with this preference level.
The steepness of the curve depends on risk aversion
Active management; finding mispriced securities / timing the market
According to EMH it is not possible to make profit actively, because the price always reflects the
stock – this is actually great because you know you can trust the price
But… you can make a profit! Suppose you’ve invested in Zoom in January… timing the market.
Active management costs a lot of money due to transaction costs
Passive management: no attempt to find undervalued securities, no attempt to time the market and
a very diversified portfolio. Low fees, index trackers.
Firms – net borrowers Households – net savers Governments – both but more borrowers
Without an IPO people can sell shares face to face.
IPO money goes to the company directly and is invested in the company.
Top-down
1. Asset allocation (stocks, bonds, real estate) – for example 40% - 30% - 30% this will have a huge
impact on your performance in the future. When 4050 its not in line anymore so you have to sell
stocks
2. Security selection: which companies within asset class?
3. Security analysis
Step 1: investment policy
- Identify investor’s unique objective
- Determine amount of investable wealth
- State objectives in terms of risk and return
- Identify potential investment categories
Investment policy should address: long run financial goals, risk tolerance, policy asset mix and choice
for active or passive management.
Factors that affect risk
, - Maturity of an instrument; the longer the more risky (think about bonds)
- Risk characteristics and creditworthiness of the issuer or guarantor of the investment (which
country, Germany saver than Italy. Different risk = different compensation)
- Nature and priority of the claims; bondholders have priority over shareholders
- The liquidity of the instrument and the type of the market in which it is traded
o Not liquid; higher risk because it is not easy to sell
Step 2: security analysis
- find mispriced securities
- using fundamental analysis: intrinsic value should be equal to discounted PV if this is not the
same, it might be mispriced
- compare current market price to true market value
- identify undervalued securities
- timing!
Step 3: construct a portfolio
Step 4: portfolio revision; increase/decrease securities
step 5: portfolio performance evaluation
Chapter 3: how are securities traded?
IPO
Process; road shows, book building. Create demand for your shares.
Underpricing: demand > supply, so the IPO becomes a success.
When you agree to go to the market for $10 per share and at the end of the day it is worth $12, you
only get $10 to invest and the $2 is profit for someone else. So you offer shares underpriced.
Facebook IPO: first year it was listed 50% lower than the IPO price – had to deal with strategy.
Adyen: 100% return first day IPO, made the news free marketing
Trading shares: direct, broker, dealer, auction
Types of orders
- Market – executed immediately
o Bid price (willing to purchase for this)
o Ask price (willing to receive this)
- Price-contingent
o Investors specify prices - I want to sell it when someone offers 10$
o Stop orders
^price contingent order
, Stop-loss order; price of the shares you own is decreasing, you sell it when the price goes below a
certain limit 34 so you limit your loss.
More explanation in the book
Less fees because effective spreads go down. Speed in trading is very important, a lot of data is
needed
Big investment bank has 2 clients, one wants to sell and one wants to buy you don’t have to go to
the exchange to save fees. You go to the ‘dark pool’ internal – the trade will never show up in the
limit order. The clients will have lower trade costs but it is not shown on the market so the
information on the exchange is not correct (you think the demand is weak but it is not weak but all
traded in the dark pool and this is not visible)
Suppose you pay the investment bank to see what to going on in the dark pools, you can go to the
exchange and with the speedy lines you can make a good trade.
Les avantages d'acheter des résumés chez Stuvia:
Qualité garantie par les avis des clients
Les clients de Stuvia ont évalués plus de 700 000 résumés. C'est comme ça que vous savez que vous achetez les meilleurs documents.
L’achat facile et rapide
Vous pouvez payer rapidement avec iDeal, carte de crédit ou Stuvia-crédit pour les résumés. Il n'y a pas d'adhésion nécessaire.
Focus sur l’essentiel
Vos camarades écrivent eux-mêmes les notes d’étude, c’est pourquoi les documents sont toujours fiables et à jour. Cela garantit que vous arrivez rapidement au coeur du matériel.
Foire aux questions
Qu'est-ce que j'obtiens en achetant ce document ?
Vous obtenez un PDF, disponible immédiatement après votre achat. Le document acheté est accessible à tout moment, n'importe où et indéfiniment via votre profil.
Garantie de remboursement : comment ça marche ?
Notre garantie de satisfaction garantit que vous trouverez toujours un document d'étude qui vous convient. Vous remplissez un formulaire et notre équipe du service client s'occupe du reste.
Auprès de qui est-ce que j'achète ce résumé ?
Stuvia est une place de marché. Alors, vous n'achetez donc pas ce document chez nous, mais auprès du vendeur tessbremer. Stuvia facilite les paiements au vendeur.
Est-ce que j'aurai un abonnement?
Non, vous n'achetez ce résumé que pour €4,99. Vous n'êtes lié à rien après votre achat.
Peut-on faire confiance à Stuvia ?
4.6 étoiles sur Google & Trustpilot (+1000 avis)
72042 résumés ont été vendus ces 30 derniers jours
Fondée en 2010, la référence pour acheter des résumés depuis déjà 14 ans