Economics Finance Presentation Key Investing Concepts

Economics Finance Presentation Jamal Adams Fall Semester 2011

Why Invest? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Compound Interest ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Compound Interest Cont.

Investing Examples ,[object Object],[object Object],[object Object],[object Object]

Modern Portfolio Theory Proposes that a rational investor can optimize his returns and minimize his risk through proper asset allocation (investing one ’s total asset amongst various classes of assets). Asset Class = A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same laws and regulations. The three main asset classes are equities (stocks), fixed-income (bonds) and cash equivalents.

More Evidence Year-Over-Year Returns Can Swing Dramatically Annual Returns of S&P 500 Index 1984 – 2008

Investing in Bonds ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Investing in Bonds

Investing in Bonds ,[object Object],Bond Rating System Moody S&P/Fitch Grade Risk Aaa AAA Investment Highest Rating Aa AA Investment High Rating A A Investment Strong Baa BBB Investment Medium Grade Ba , B BB , B Junk Speculative Caa / Ca / C CCC / CC / C Junk Highly Speculative C D Junk In Default

[object Object],Investing in Bonds Issuer Mrkt Price Coupon Maturity YTM Rating Goldman Sachs 103.18 3.700 Aug. 2015 2.999 A Anaheim Board of Ed 120.74 5.000 Aug. 2015 .700 AAA T-Note 4.500 115.16 4.500 Nov 2015 1.456 AAA

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Investing in Bonds

[object Object],[object Object],[object Object],[object Object],Investing in Bonds

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Investing in Cash

Investing in Stocks ,[object Object],[object Object],[object Object],[object Object],[object Object]

Investing in Stocks ,[object Object],[object Object],[object Object],[object Object]

Investing in Stocks ,[object Object],[object Object],Category Minimum Maximum Micro Cap Up to $100 Million Small Cap $100 Million $1 Billion Mid Cap $1 Billion $10 Billion Large Cap $10 Billion $50 Billion Mega Cap $50 Billion and Above

Investing in Stocks ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Investing in Stocks ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Investing in Stocks ,[object Object],Company PE Ratio Microsoft(MSFT) 8.7X Home Depot(HD) 14.1X Google(GOOG) 16.7X Nike(NKE) 17.3X S&P 500 11.2X

Other Investment Vehicles ,[object Object],[object Object],[object Object]

Economics Finance Presentation Key Investing Concepts

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