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Investment and Management Analysis Fin: 3014 University of Technology, Jamaica School of Business Administration Unit 1: Tutorial

This document provides an overview of key investment concepts for a university-level finance course. It defines investment as committing money or capital to assets with the goal of gaining a profit. It also defines risk as the uncertainty of investment returns, which is used to differentiate investments. The document outlines the seven steps in developing an investment program: (1) setting investment goals, (2) assessing risk tolerance, (3) diversifying assets, (4) choosing investments, (5) implementing a plan, (6) rebalancing a portfolio, and (7) reviewing performance. It also lists four common investment goals as income, growth, speculation, and hedge/diversification. Finally, it describes short-term investments as having

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167 views1 page

Investment and Management Analysis Fin: 3014 University of Technology, Jamaica School of Business Administration Unit 1: Tutorial

This document provides an overview of key investment concepts for a university-level finance course. It defines investment as committing money or capital to assets with the goal of gaining a profit. It also defines risk as the uncertainty of investment returns, which is used to differentiate investments. The document outlines the seven steps in developing an investment program: (1) setting investment goals, (2) assessing risk tolerance, (3) diversifying assets, (4) choosing investments, (5) implementing a plan, (6) rebalancing a portfolio, and (7) reviewing performance. It also lists four common investment goals as income, growth, speculation, and hedge/diversification. Finally, it describes short-term investments as having

Uploaded by

Tika Cameron
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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INVESTMENT AND MANAGEMENT ANALYSIS FIN: 3014

UNIVERSITY OF TECHNOLOGY, JAMAICA


SCHOOL OF BUSINESS ADMINISTRATION
UNIT 1: TUTORIAL

1. Define the term investment, and explain why individuals invest?

2. Define the term risk, and explain how risk is used to differentiate among investments?

3. What should an investor first establish before developing and executing an investment
program? Briefly describe each of the seven steps involved in investing.

4. What are four common investment goals?

5. Explain the characteristics of short-term investments with respect to purchasing power


and default risk?

Case Problem

1. Case : Investments or Golf?

Judd Read and Judi Todd, senior accounting majors at a Midwestern university, have
been good friends since high school. Each has already found a job that will begin after
graduation. Judd has accepted a position as an internal auditor in a medium-size
manufacturing firm. Judi will be working for one of the major accounting firms. Each is
looking forward for to the challenge of a new career and to the prospect of achieving of
achieving success both professionally and financially.

Judd and Judi are preparing to register for their final semester. Each has one free elective
to select. Judd is considering taking a golf course offered by the physical education
department, which he says will help to sociali8ze in his business career. Judi is planning
to take a basic investment course. She has been trying to convince Judd to take
investments instead of golf. Judd believe he doesn’t need to take investments because he
already knows what common stock is. He believes that whenever he has accumulated
excess funds, he can invest in the stock of a company that is doing well. Judi argues that
there is much more to it than to it than simply choosing common stock. She feels that
that exposure to the field of investments would be more beneficial than golf.

Questions
a. Explain to Judd the structure of the investment process and the economic importance
of investing?
b. List and discuss the other types of investment vehicles with which Judd is apparently
unfamiliar?
c. Assuming that Judd already gets plenty of exercise, what arguments would you give
to convince Judd to take investments rather than golf?

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