Invetment bearing Securities & their role in Portfolio Essay

2663 Words Feb 28th, 2014 11 Pages
INvestment & Portfolio Management
Interest Bearing Securities and Their Role in Portfolio Management
Individual Assignment No.1

Nishith Panthi
1/15/2014

Contents
Executive Summary…………………………………………………………………………………………………………………………………3
Introduction…………………………………………………………………………………………………………………………………………….3
Interest bearing Securities……………………………………………………………………………………………………………………….3
Money Market Securities………………………………………………………………………………………………………………………..3
Long Term Securities……………………………………………………………………………………………………………………………….4
Distinguish Between Money Market Securities and Capital Market Securities……………………………………..4-5
Techniques for Valuation of Securities and Other Assets…………………………………………………………………………6
Assets Classes and Portfolio
…show more content…
Any government or corporation requires capital (funds) to finance its operations and to engage in its own long-term investments. To do this, a company raises money through the sale of securities - stocks and bonds in the company's name. These are bought and sold in the capital markets and are known as long term securities.
Cities, states, the federal government, and corporations issue bonds to raise capital for purposes such as building roads, improving schools, opening new factories, and buying the latest technology. Individual bonds can help provide stability for investor’s portfolio. By diversifying your investments across different asset classes—such as stocks, bonds, and cash—an investor can balance his risk versus potential return. Investors also use fixed income for savings and to generate income.

Adding bonds to a stock portfolio can help lower the portfolio’s volatility over time because stock and bond prices historically have not generally moved in the same direction and in the same magnitude at the same time (Charles SCHWAB, 2013).

Distinguish Between Money Market Securities and Capital Market Securities:
Money market is a component of financial market where short-term borrowing can be issued. This market includes assets that deal with short-term borrowing, lending, buying and selling. The
Open Document