FIN 501 Lecture Notes - Lecture 3: European Cooperation In Science And Technology, Market Timing, Pepsico
20 Nov 2017
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Learning objectives: the importance of an investment policy statement, the various types of securities brokers and brokerage accounts, how to calculate initial and maintenance margin, the workings of short sales. Why invest at all: we invest today to have more tomorrow, investment is simply deferred consumption, we choose to wait because we want more to spend later. Investors have their own investments objectives and strategies. The investment policy statement (ips: designed to reflect your objectives and strategies, 2 parts, objectives, constraints. In formulating investment objectives, the individual must balance return objectives with risk tolerance. Investors must think about how much risk they can handle. Your risk tolerance is affected by: your ability to take risk, your willingness to take risk. Most people are inclined to think security selection is the more important element for successful investing. Research shows, however, that asset allocation is the more important determinant of portfolio returns.
