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Employment of funds on assets with the aim of

earning income or capital appreciation

Investment means a monetary commitment- lay person

Investment is the net addition made to the nation’s


capital stock that consists of goods and services that are
used in production process - Economist

Investment is the allocation of money to assets that are


expected to yield some gains over a period of time
- Finance
Investment involves employment of funds with the aim of
achieving additional income or growth in values.
Lending money to another [interest]
Purchasing of gold[value appreciation]
Purchase of insurance plan[promised future benefits]

“A commitment of funds made in the expectation of some


positive rate of return”

“A sacrifice of current money or other resources for future


benefits”.
Return
Risk (Bank Deposits, Govt. Bonds, UTI units, non-
convertible bonds, convertible debentures, equity shares etc.)
Maintain liquidity
Increasing safety
Tax benefits
Primary objectives are:
Maximizing the return

If the share value is 50/- initially. We hold it up to one year.


The divided for month is 5/- and at the end the year we sold
that share at 60/-. What is our return on investment?
Investment is something that is purchased with money that
is expected to produce income or profit
It commonly referred to as common stock or ordinary shares.
Equity shares are the main source of finance of a firm.
It is issued to the general public.
Equity shareholders do not enjoy any preferential rights with
regard to repayment of capital and dividend.

They are permanent in nature


Equity shareholders are the actual owners of the company
and they bear the highest risk
Equity shares are transferable
Equity shareholders do not get fixed rate of dividend
Equity shareholders have the right to control the affairs of
the company
The liability of equity shareholders is limited to the extent
of their investment.
New issue(IPO).
Bonus issue.
Right issue.(Sec 81 of Companies Act, 1956)
Sweat issue(Sec 79A of Companies Act, 1956 & SER 2002 SEBI)
Preferred stock is hybrid in nature
It receives fixed amount of income as dividend
It is perpetual liability of the corporate
These shares holders do not enjoy any of the voting powers.
Return of preference share capital before the return of equity
share capital at the time of winding up of the company.

Cumulative Preference Shares


Non-Cumulative Preference Shares
Redeemable Preference Shares
Non-Redeemable Preference Shares
Convertible Preference Shares
Non-Convertible Preference Shares
Cumulative Convertible Preference Shares
A Bond is a long-term debt instrument that promises to pay a fixed
annual sum as interest for a specified period of time.
Bonds have a face value and interest rate.
The maturity date of the bond is usually specified at the time of
issue.
The redemption value is also stated in the bonds. Bonds are traded
in the stock market

Secured Bonds and Unsecured Bonds


Perpetual bonds and redeemable bonds
Fixed interest rate bonds and floating interest rate bonds
Zero coupon bonds
Debentures are generally issued by the private sector
companies as a long term promissory note for raising loan
capital.
The company promises to pay interest and principal as
stipulated.

Debenture holders are the creditors of the company carrying


a fixed rate of interest.
Debenture is redeemed after a fixed period of time.
Debentures may be either secured or unsecured.
Interest payable on a debenture is a charge against profit and
hence it is a tax deductible expenditure.
Debenture holders do not enjoy any voting right.
Interest on debenture is payable even if there is a loss.
Ordinary Debenture
Mortgage Debenture
Non-convertible Debentures
Partly Convertible Debentures
Fully Convertible Debenture
Redeemable Debentures
Irredeemable Debenture