rucha sapm

7/17/2019 Rucha SAPM

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Subject : SAPMCHAPTER :1Name : RuchaSem : 3

Roll no. :15



Chapter Outlne

Meann! o" #nance an$ mone%

Meann! o" Con&umpton' Sa(n! ) *n(e&tment

*n(e&tment (+& Speculaton (+& !ambln!

A(enue& o" n(e&t

Nee$ "or n(e&tment

Tran!le o" n(e&tment

R&, an$ return

• meann!

• t%pe o" r&,

• S.-.' Co(araton ) corelaton

• CAPM ) SM/

•

Meann! o" port"olo an$ $(er&#caton



Meaning of nance and mon

Finance

0nance & the mana!ement o" mone% an$ other (aluable&.

nance & the to obtan o" "un$& an$ e2ect(e utlaton o" "u

Money

Mone% mean& 4hat mone% $o&e

Mone% & a me$um o" echan!e



Meaning of Consumption, SavinInvestment

*ncomeCon&umpton&a(n!n(e&tment

*" 4e po&tpone$thecon&umpton

Put the n4or,n! 4tham o" return



Investment v/s Speculation v/s gambling

Basis Investment Speculation Gam

Tme Horon /on! term Short term 6

hol$n! a&&et& "romone $a% up to one%ear

&hor

&pecn(e

R&, /mte$ 7calculate$8 H!h 7calculate$8 H!hcalcu

proce&& contnuou& proce&& *n bet4een mm

Stablt% o" ncome 9er% Stable ncertan an$r&,%

luc,



Avenues ofinvestment

-2erent 4a%& that one can n(e&t there mone%

*n(e&tment alternat(e



eed fo! investment

To ,eep the (alue o" %our mone% "rom in"ation.

To !et a good !etu!n "rom %our $eal mone%.

To &at&"% %our futu!e nancial !oal&.

Pro($e enou!h mone% "or meetn! unce!tain futu!e needs



#!iangle of investment

The #r&t &tep to n($etermne 4hch o"re&ult& are mo&t m%ou:

Sa"et% Ho4 much4lln! to ta,e;;

*ncome -o %ou ne"rom %our n(e&tme4ant to ren(e&t t;

<ro4th Ho4 muc%our n(e&tment to



$is% and !etu!n

Retune 4ll be count on:

18 ncome+ $($en$

=8 pro#t+ !ro4th

-t > 7P1 6 P? 8

P?

R @



R&,:

<ettn! ? or lo4er return then 4e epect.

T%pe o" r&,S%&tematc r&,Mar,et r&,*ntere&t r&,Purcha&n! po4er r&,un&%&tematc r&,u&ne&& r&,nancal r&,



CAC'#I( (F S)*)

Satiate ofeconomy

+!obability

A -pected!etune

A. 0A.12

1 ?.3? 1B .D .5 =?.=5

= ?.5? 11 5.5 ?.5 ?.=5

3 ?.=? B 1.= 5.5 3?.=5

total 11.5

S.- @ 1=.5=

@ 3.5



Co(araton ) corelaton

Corelaton @ co(ran

S-A

@ =G

F.=

@ ?.GG

*eviation

0A.41

*eviation

0(.51

+!obaty

D 1 ?.1?

3 B ?.3?

= ?.5?

1= ?.1?

Cova!iance &ho4& ho4 t4o &toc,& m!ht

move toget6e! n the "uture.

*t mea&ure& 4hether the t4o mo(e n thesame di!ection 0a positive cova!iance1 orn opposite di!ections 0a negativecova!iance1)

to $etermne the st!engt6 of t6e!elations6ip' 4e nee$ to loo, atthe correlaton.

mea&urement (alue bet4een 1 an$ 1 co!!elation is

89 t6ey move pe!fectly toget6e!

.89 t6ey move pe!fectly in oppositedi!ections)

:9 t6ey move in !andom di!ections f!om

eac6 ot6e!)



CAPM 4a& $e(elope$ n 8<=:s by >illiamS6a!pe?s.

A mo$el that $e&crbe& the relaton&hp bet4een!is% and e-pected !etu!n an$ that & u&e$ nthe prcn! o" r&,% &ecurte&.

CAPM' there"ore' e(ol(e$ a& a 4a% to mea&ureth& &%&tematc r&,

$ 9 $f @ 0$m $f 1b

Where,

R = required rate of return of security Rf = risk free rate

Rm = expected market return

B = beta of the security

Rm – Rf = equity market premium

Suppo&e the r&, "ree rate o" the &ecurt% & BI1.=5' Then the reJure$ rate o" return "or the &ec

R @ B > 71= 6 B8 F 1.=5

R @ B > .5

R @ 13.5I

CAPM



SECR*TK MARLET/*NE The SM/ e&

the re&ult&

a&&et prcn"ormula.

*" the &ecurepecte$ re

above t6eunde!valun(e&tor careturn "or t

A &ecurt% p

SM & ovethe n(e&to

acceptingthe amoun



+($#F(I(

+o!tfolio: A !roup o" act(t%

A !oo$ port"olo con&&t& o" #nancal a&&et& that are

&tron!l% po&t(el% correlate$

*t help to $(er&"% the r&,

A !oo$ port"olo con&&t& o" #nancal a&&et& that are

&tron!l% po&t(el% correlate$

collecton o" a&&et&&uch a& &toc,' bon$&' an$ mut

hel$ b% an n(e&tor



*I$SIFICA#I(

A diversifed portolio should consist osecurities that are not perectly positivcorrelated.

Diversifcation is basically used as a to

spread the risk across the number o asinvestments.



status $etu!n +!obability

-pected!etu!n

*eviation

0deviation12

1 571??8>5715?8 @1=5? ?.3 35 D5 ==5

= 5711?8>571?8 @1=??

?. D? 35 1==5

3 571=?8>57G?8 @1?5?

?.= =1? 115 13==5

571?8>57B?8 @

1??

?.1 1?? 1B5 ===5

total 11B5

S.-. @ D?5 @DG.5D

Port"olo return @ 1FR1>=FR=>>nFRn

Port"olo r&, @ 1FS-1>=FS-=>>nFS-n



blo!raph%

http:++444.n(e&tope$a.com+artcle&+#nancaltheor%+11+carance.a&p

Note boo,

http&:++en.4,pe$a.or!+4,

http://www.investopedia.com/articles/financial-theory/11/calculating-covariance.asp




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