Investment Analysis and Portfolio Management: A Comprehensive Report

This report offers a detailed overview of investment securities, categorizing them into derivative securities, equity securities, and debt securities. It explains the characteristics of each type, including the rights and shortcomings of equity securities and the different types of debt securities like bonds and commercial papers. The report also covers derivative securities and their purpose in managing risk. Furthermore, it discusses bonds, including treasury and corporate bonds, and provides an explanation of mutual funds, detailing various types such as fixed income funds and equity funds. The document includes a list of references to support the information presented. This assignment, available on Desklib, provides a comprehensive understanding of investment analysis and portfolio management, offering valuable insights for students.

1
Investment Analysis and Portfolio Management
Name:
Course
Professor’s name
University name
City, State
Date of submission

2
Securities
A financial security is document that is held to show that one is an owner of a company that is
listed in the stock exchange or is owed a part of the debt issue. They have a monetary value. In
recent years’ derivatives have also been emerging as a commonly used financial security.
Financial securities have the following features; First, is that they are easily tradable, that means
that they can easily be converted into cash Rosenbaum, J. and Pearl, J., (2018). Apart from
derivatives, securities allow the owner to own underlying asset without taking the physical
possession. Securities are categorized into three categories, derivative securities, equity
securities and debt securities.
1. Equity securities
An equity security is a form of interest in a company’s capital. Owning an equity security
signifies that one has contributed to the capital of the company. This share symbolizes monetary
value Ghysels, E., Idier, J., Manganelli, S. and Vergote, O., (2016). The owners of equity securities
have certain duties and rights that they are entitled to. Apart from being entitled to the
company’s profits they are also entitled to participate in the operations of the company through
exercising their right to vote. The shortcoming of this type of security is that in an instance
where the company is making losses, they get no return. Also, in cases of bankruptcy they are
on the losing end.
2. Debt Securities

3
These securities stand for debt that lenders are owed by the company Valdez, S. and Molyneux, P.,
(2015). There are different categories of debt securities namely, debentures, bonds and
commercial papers Corwin, S.A., Larocque, S.A. and Stegemoller, M.A., (2017). They are dissimilar
from one another in terms of collateral and maturity. They earn interest until and do not have
voting rights.
3. Derivative securities
These are securities whose value is derived from an underlying asset such as currencies, stocks,
bonds and other assets. They are used to contain risk such as fluctuation of currency and adverse
interest rates.
Bonds
Bonds are loans made to large companies and national governments. They earn a fixed income
over a given period of time. The bonds vary according to risk, the issuer, interest rate and
maturity length.
1. Treasury bonds
These are bonds that are issued by a government to finance a project. They are categorized into
short term treasury bonds which are the safest but pay the least interest. There are longer term
interest bonds which have marginally higher yields and offer a risk that is slightly less.
2. Corporate bonds

4
These are bonds that are issued by corporates. They highest risk and highest paying are called
junk bonds.
Mutual Funds
This is a pool of money given by organizations and individuals for fund managers to invest in
various investment opportunities like bonds and stocks. Since it is collective every investor loses
and benefits in equal portion. There are several types of funds namely; fixed income funds,
Equity funds and balanced funds, index funds, funds of funds and specialty funds.

5
References
Corwin, S.A., Larocque, S.A. and Stegemoller, M.A., 2017. Investment banking relationships and analyst
affiliation bias: The impact of the global settlement on sanctioned and non-sanctioned banks. Journal of
Financial Economics, 124(3), pp.614-631.
Ghysels, E., Idier, J., Manganelli, S. and Vergote, O., 2016. A high-frequency assessment of the ECB
Securities Markets Programme. Journal of the European Economic Association, 15(1), pp.218-243.
Rosenbaum, J. and Pearl, J., 2018. Investment Banking: Valuation Models+ Online Course. Wiley.
Valdez, S. and Molyneux, P., 2015. An introduction to global financial markets. Macmillan International
Higher Education.