INVESTMENT

AVENUES
EQUITY SHARES
▪ A share is a document which is issued by a company, registered with the stock exchange, by
which the holder of the share becomes one of the owners of the company.
▪ Two of the biggest stock types are preferred stock shares and common stock shares/ Equity
Shares.
Equity shares/common shares/ordinary shares.
– These shares are the most commonly traded shares, and they give you a vote in
company matters.
– Equity shares can be purchased from the stock market or from the company when it
announces public issue of its stock.
– They earn a dividend as long as the company is earning money, and this dividend
directly corresponds to the profit made by the company.
– High profits mean high dividends for you.
– Ordinary shares have no special rights or restrictions.
▪A share is the interest of a member in a company. Section 2(84)of the
Companies Act, 2013 (hereinafter referred to as Act) “share” means a share in the
share capital of a company and includes stock. It represents the interest of a
shareholder in the company, measured for the purposes of liability and dividend.
It attaches various rights and liabilities.
TYPES OF EQUITY SHARES
▪Blue Chip Shares:
– These are the shares of companies which are well established and reputed in all
fields.
– These shares normally pay dividends, and have a track record of performance
and earnings.
– Blue chip companies also have no large amounts of liabilities. Blue chip shares
are usually the cream of the crop, and are sought after. These types of shares are
generally considered stable and safe as an investment.
The Blue Chip companies include ITC Ltd, HUL, TCS, Infosys, ONGC, SBI, ICICI,
Microsoft, Coca- Cola, Reliance, ONGC, NTPC,, Tata Steels, Wipro, and a few
others.
▪Income Shares:
– These companies have a stable share value and always pay high dividends.
– Since they have high dividend payout ratio, the profits of the company saved are
less and so their growth opportunities are very less.

▪Growth Shares:
– These are shares of companies which are on top in their industry.
– The shares have less dividend payout and so their growth rate is high.
▪ Cyclical Shares:
– Some company’s performance keeps fluctuating like a business cycle meaning the
share prices are affected with any variations in the economy.
– Sugar and fertilizer are two such industries.

▪Defensive Shares:
–
The shares of these companies are not affected by the economical changes.
▪Speculative Shares:
– The shares here are traded on speculations. These shares are high risk in nature but
also give very high returns in short terms.
– The scrips fall sharply suddenly so investors should always keep an eye on it always.
▪Value shares:
▪ –
are shares which investors believe have been undervalued, and these shares are
believed to be worth more than the current market value.
PREFERENCE SHARES
Preference shares are those which carry
– A preferential right as to the payment of dividend during
the lifetime of the company
– A preferential right as to the return of capital when the
company is wound up
• These shares carry a right of dividend at a fixed rate
before any dividend can be paid on equity shares.
• The fixed rate of dividend payable is declared at the
time of the issue of such shares
 KINDS OF PREFERENCE
SHARE
i. Cumulative or non- cumulative
ii. Redeemable or irredeemable
iii. Participating or non- participating
iv. Convertible or non- convertible
 CUMULATIVE VS. NON-
CUMULATIVE
• The holder of cumulative preference shares are entitled to
recover the arrears of preference dividend before any
dividend is paid on equity shares.

– Example, if dividend has not been paid for the accounting years
2007-08 and 2008-09 on 10% cumulative preference shares and the
company wants to distribute dividend on equity shares for the year
2009-10, then dividend on preference shares for 3 years viz., 07-08,
08-09 and 09-10 10% p.a. i.e. 30% dividend in all will be paid first on
preference shares before any dividend can be paid on equity shares
for 09-10.
 CONT…..
• In case of non- cumulative preference shares, arrears of
dividend do not accumulate and hence, if dividend is to be
paid on equity shareholders in any year, dividend at the
fixed rate for only one year will have to be paid to
preference shareholders before equity dividend is paid.
• Note :- Unless specifically mentioned otherwise,
preference shares should be considered to be cumulative.
 REDEEMABLE VS.
IRREDEEMABLE
• Redeemable preference shares are those preference shares
whose amount can be returned by the company to their
holder within the life time of the company subject to the
terms of the issue and the fulfillment of certain legal
conditions laid down in the companies act.

• The amount of irredeemable preference shares can be

returned only when the company is wound up.
 PARTICIPATING VS. NON-
PARTICIPATING
• Participating preference shares are entitled not only to fixed
rate of dividend but also to a share in surplus profits which
remain after dividend has been paid at a certain rate to equity
shareholders. The surplus profits are distributed in a certain
agreed ratio between the participating preference
shareholder and equity shareholder.

• Non- participating preference shares are entitled to only the

fixed rate of dividend.
 CONVERTIBLE VS. NON-
CONVERTIBLE
• The holder of convertible preference shares enjoy the
right to get the preference shares converted into equity
shares according to the terms of issue.
• The holder of non- convertible preference share do
not enjoy this right.
 BOND
A bond is a debt instrument issued by governments,
corporations and other entities for raise funds.

Definition
A bond is a (written and signed debt investment in which an
investor loans money to an entity (typically corporate or
governmental) which borrows the funds for a defined period of
time at a variable or fixed interest rate (Coupon Rate).
FEATURE OF BOND
• Issue/Face-value

• Maturity

• Coupon/Interest

• Credit Quality
CLASSIFICATION OF
BONDS
• Secure and Unsecure
• Term bond, Serial Bond and Callable Bond
• Convertible and Non-Convertible
• Registered and Un-Registered or Bearer
Bond
• Commodity Backed (Bond is not backed by
cash)
BENEFITS OF INVESTMENT
IN BONDS
• Diversification “don’t put all your eggs in one
bucket”.
MAJOR TYPES OF BONDS

Bond

Governme Municipa Corporation Zero-Coup

nt l s Bond on
Bond Bond Bond
CONT.…
• It is also known as Treasury Bond.
• It is issued by a national government, generally
with a promise to pay periodic interest payment
and to repay the face value on the maturity
date.
• They are usually denominated in the country's
own currency.
• It is safest bond with the lowest interest rate.
 CORPORATE
BOND
• A bond which is issued by a corporation in order to raise
financing for a verity of reasons, such as to ongoing operations
or to expend business.
• The term is usually applied to longer term debt instrument, with
maturity of least one year.
• Corporate debt instrument with maturity shorter than one year
are referred as a commercial paper.
 RISK
ANALYSIS

• Compared to government bonds, corporate bonds

generally have a higher risk.
• Corporate bond holders are stated for this risk by
receiving a higher yield than government bond.
 ZERO-COUPON
BOND
• It is also known as an “accrual bond” is a debt security that doesn't
pay interest (coupon) but is traded at a discount, rendering profit at
maturity when the bond is redeemed for its full face value.
• The maturity dates on zero coupon bonds are usually long term,
with many having initial maturities of at least 10 years.
• It doesn't make regular interest payments or so - called coupons,
hence term zero-coupon bond.
OTHER TYPES OF BOND
• Personal Bond
• High Yield Bond
• Convertible Bond
• Perpetual Bond
• Bearer Bond (unregistered Bond)
• Registered Bond
• War Bond
• Serial Bond
• Revenue Bond
 PERSONAL BOND
• is a written contract in which a person who has been
arrested agrees to appear at all required court dates
and promises to abstain from breaking the law while
the personal bond is in force. Once the contract is
signed, payment of bail is waived, and the arrested
person is released from jail.
 SETTING THE PERSONAL
BOND AMOUNT
• Personal bond is a amount of money set by a judge or magistrate,
required to be paid or agreed upon prior to releasing a defendant from
jail before his or her court hearing date.
• This amount is required to be paid to pretrial service within 7 days of
release, or the bond may be revoked.
• The contract for a personal bond includes a provision that the
defendant is
• Responsible for paying the full amount of the bail for failing to appear
at court when required
 HIGH YIELD BOND OR
JUNK BOND
• A junk bond refers to high-yield or non investment-grade
bonds. Junk bonds are fixed-income instruments that carry
a credit rating.
• Junk bonds are so called because of their higher default
risk in relation to investment grade bonds.
• These bonds have a higher risk and higher yield which
attracts to investor.
 RISKS
• Interest rate risk
• Credit risk
• Duration risk
• Repayment of principal
risk
CONVERTIBLE BONDS
• It is type of bond that the holder can convert into
a specified number of shares of common stock
in the issuing company or cash of equal value.
• It has the maturity of greater than 10 years.
• It is a Hybrid security with debt and equity-like
features.
• A convertible bond has a coupon rate lower than
that of similar non-convertible debt.
PERPETUAL BOND
• It is a bond with no maturity date. Therefore, it
may be treated as equity, not as debt .
• Issue pay coupons on the perpetual bonds
forever and they do not have to redeem the
principal.
• Perpetual bond cash flows are, therefore, those
of a perpetuity.
 BEARER BOND
• It is an certificate issued without a name of its holder. In
other words, the person who has the paper certificate
can claim the value of the bond.
• They are traded like cash.
• Bearer bonds are very risky because they can be lost or
stolen.
• Bearer bond in the event of its lost, theft, or
destruction.
• Relief is possible in the case of US public debt.
 REGISTERED BOND
• It is a bond whose ownership is recorded by the
issuer, or by a transfer agent.
• Interest payments, and the principal upon maturity
are sent to registered owner.
• It is alternative to a bearer bond.
• Interest is pay only registered person.
WAR BOND
• It is bond issued by government to fund military operations
during war time. This type of bond has low return rate.
• War bond are often accompanied by appeals to patriotism
and conscience.
 SERIAL BOND
• It is a bond that matures in installments over a period of
time.
• Serial bonds (or installment bonds) describes a bond issue
that matures in portions over several different dates.
Instead of facing a large lump-sum principal re-payment at
maturity, an issuer can opt to spread the principal
repayment over several periods.
REVENUE
BOND
• Revenue bond is issued by a (local) government.
• It is a special type of municipal bond distinguish by its
guarantee of repayment.
• Revenue bonds are typically non-recourse, meaning that in
the event of default, the bond holder has no alternative to
other governmental asset or revenues.
PURPOSE
• Revenue bonds may be issued to constant or expand
upon various revenue generating entities including:

• Toll Roads and bridges

• Airports, Seaports
• Power Plants
• Prisons
MUTUAL FUNDS
▪OPEN ENDED SCHEMES – uninterrupted entry &
exit
▪CLOSE ENDED SCHEMES – Fixed maturity period

▪INTERVAL SCHEMES – combination of both open

and close
TYPES OF MUTUAL FUNDS
▪ Equity fund
▪ Growth Fund
▪ Income Fund
▪ Balanced Fund – Debt & Equity
▪ Index Fund
▪ Debt Fund – Gilt Fund & Liquid Fund
▪SIP – Systematic Investment Plan
▪SWP – Systematic Withdrawal Plan
▪STP – Systematic Transfer Plan
REAL ASSETS
▪ Gold – physical Gold – Bars and Coins & Ornaments
▪ Gold Securities – ETF & GOLD options and Futures
▪ Silver ,
▪ Diamonds
▪ GEMS
▪ Platinum and Palladium
▪ REAL Estate
▪ Art & Antiques
 INSURANCE
Insurance is a contract in which an individual or entity receives financial
protection or reimbursement against losses from an insurance company.
Premiums

Insurance
Company Claims

HOW INSURANCE WORKS

 MEANIN
• Life insurance G
is a contract between an insured (insurance policy holder)
and an insurer or assurer, where the insurer promises to pay a designated
beneficiary a sum of money in exchange for a premium, upon the death of the
insured person.
• Depending on the contract, other events such as terminal illness or
critical illness can also be the reason for the payment.
• The policy holder typically pays a premium, either regularly or as one lump
sum. Other expenses (such as funeral expenses) can also be included in the
benefits.

3
 TYPES OF LIFE INSURANCE
POLICIES
INSURANCE
POLICIES

INSURANCE
PURE CUM
INSURANCE INVESTMENT
POLICIES

TERM WHOLE UNIT MONEY ENDOWME

PLANS LIFE LINKED BACK NT
PLANS INSURAN PLANS
CE