An introduction to investment management

1. Investment Management Session 4

2. Bond Valuation Terms Par Value (Face value) Coupon rate Maturity Date

3. Bond Types Types Government Bonds Corporate Bonds Straight Bonds Zero Coupon Bonds (Deep Discount Bonds) Floating Rate Bonds Bonds with Embedded Options Convertible Bonds Callable Bonds Puttable Bonds Commodity Linked Bonds

4. Bond Pricing Price of a bond Current Yield

5. Bond Pricing Yield to Maturity Ideal Way is to solve for ‘r’ Short cut approximation: Holding Period Return

6. Risks in Bonds Interest Rate Risk Inflation Risk Real Interest Rate Risk Default Risk Call Risk Liquidity Risk Reinvestment Risk Foreign Exchange Risk

7. Duration & Immunisation Duration - Weighted Average life of bond which considers the size and timing of each cash flow. Immunisation – Matching Price risk & Reinvestment risk Match the investment period with the duration

8. Mutual Funds Organisation Structure Sponsor Mutual Fund Trust Trustee AMC Custodian Registrars & Transfer Agents

10. Diversified

11. Index

12. Sectoral

13. Tax Planning

14. Debt

15. Gilt

16. Mixed Debt

17. Floating Rate

18. Cash

19. Hybrid

20. Equity Oriented

21. Debt Oriented

23. Calculating NAV NAV = (Market value of investment + Receivables + Accrued Income – Liabilities – Accrued Expenses) / Number of units outstanding

24. Derivatives – Forwards & Futures An Agreement to buy or sell at a predetermined price at a future date. Forward Vs Future Futures Clearing House Margins Mark-to-market Price limits

25. Futures Equity Index Interest rate Foreign Exchange Commodities

27. Call (option to buy) or Put (option to sell)

28. Exercise Price or Strike price or Striking price

29. Expiration or Maturity Date

30. European Option and American Option