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ahmed gad's materialTRANSCRIPT
Investment and portfolio management
Agenda
• Financial statements • Why people invest :• Investment Goals • Required Rate Of Return• Capital Markets • Stock Issuing • Debt• Risk Management
Financial statements
• Balance Sheet • Income statement • Cash flow statement• Shareholders equity statement• Notes
• Example : Differences Between – Company Balance sheet – Bank Balance Sheet
• Differences Between Assets & Financial assets:– Assets ( Land , building , equipments , goodwill ) – Financial Assets ( T-bill , T-bond , Stocks , Currency
, derivatives ) • Bank portfolio : Is an allocation of financial assets
Financial statements
Why people invest :
• Maximizing Value • Inflation ( time value of money )
Investment Goals
• Near-term, high-priority goals• Long-term, high-priority goals • Lower-priority goals
Required Rate Of Return
• K = Rs = RFR + B ( MRP ) • K = Rs : Required Rate Of Return • RFR : Risk Free Rate ( T- bond )• B : Beta = sensitivity to movements in
the relevant market
• Assume the company has a beta coefficient of 1.2, that the risk-free rate (the yield on T-bonds) is 7.0%, and that the market risk premium is 5%. What is the required rate of return on the firm’s stock? 7 % + 1.2 (5 %) = 13 %
Required Rate Of Return
Capital Markets :
• Get Finance • Exit Strategy
Stock Issuing :
Primary Market
Issuer company Underwriter
Investor
Regulations
IPO Private Placement
Stock Issuing :
Secondary Market
Stock exchange
Brokerage firm
Corporate events
Debt
• (Debt Instrument ) Companies Issuing Bonds to Borrow money from investors and promised to pay it back at a certain rate of interest.
• Example :– Interest At Maturity ( Deposits ) – Amortized Cash Flow ( Cars ) – Bond Time Line– Fixed and Floating
Debt
• Rating Agency : Moody's , S&P :– The Rating Reflect The Credit Worthiness of the
Issuer .
Risk Management
• Risk is The uncertainty that an investment will earn its expected rate of return .
• Types Of Risk :– Country Risk ( Political ) , Business Risk . Financial
Risk ( Leverage ) , Liquidity Risk & Exchange Rate Risk .
Risk Management
• Relationship between risk and return
Risk Management
Risk Management
• Basel 1 , 2
• اليوم العالم• المال
• Mubasher .info• Amcham.org.eg• CFAinstitute.org• Eima.org.eg• egx.com
