Financial Investments
Chapter Goals
Overview
Establish goals.
Consider personal factors.
Include capital market factors.
Identify and review investment alternatives.
Evaluate specific investment considerations.
Employ portfolio management principles.
Implement portfolio management decisions.
Review and update the portfolio.
Establish Goals
Return
Return, cont.
Risk
10
Risk, cont.
11
Risk, cont.
Company A
Company B
12
Time
Risk, cont.
13
Risk, cont.
14
Risk, cont.
15
16
Risk-Free Rate
Risk Premium
17
18
19
20
21
23
24
Geographic Area
Company Size
25
Quality
26
Mutual Funds
Combine stock or bond assets for investors who receive
centralized administration and investment management.
Year
Stock Funds
Bond Funds
Total1
1970
45.1
2.5
47.6
1975
37.5
4.7
45.9
1980
44.4
14.0
134.8
1985
111.3
122.7
495.4
1990
239.5
291.3
1,065.2
1995
1,249.1
598.9
2,811.3
2000
3,961.9
811.2
6,964.7
2004
4,384.1
1,290.3
8,106.9
1
Hybrid and money market funds are also included in total.
Source: Investment Company Institute, Mutual Fund Fact Book 42nd ed.
27
361
426
564
1,528
3,079
5,725
8,155
8,044
Expertise.
Low Cost.
Diversification. Low Minimum Investment.
Professional Recordkeeping.
General Information.
Safety. Daily Pricing.
Reinvestment and Payout.
Weaknesses:
Cost.
28
Performance.
Tax.
Liquidity.
29
30
31
32
33
34
35
36
37
38
39
Chapter Summary
40
41
42