Page 18 - Introduction To Investment Management

Summary:

• Investment refers to the commitment of financial resources that we
have today hoping to earn a profit / benefit in the future.

• Investment can occurs either own/invest in the financial assets or
physical assets.

• Investments are made based on consideration of a reasonable
amount of return and risk rather than speculative activities that

address the high-risk investment with the higher expected rate of

return. Speculative actions would expose investors to a higher risk.
• Customers of the financial system are divided into three main sectors,
namely household sector, corporate sector and government.

• The financial market consists of three main categories: Money

Market, Capital Market and Derivatives Market.
• Money market refers to the short-term securities or financial

instruments, where it has a lower risk and marketable.
• Capital Markets comprise of along-term financial instruments, where

it bears higher risk and relatively difficult to convert into cash and
transferred the ownership. The rate of return offered is higher than

the money market instruments.
• Derivatives Markets is a market where a financial instrument is

pegged to the value of an asset or commodity basis. This market is
very useful as a way to protect the value of commodity price changes

dramatically.

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