Investment Banking Individual Assignment

INVESTMENT BANKING INDIVIDUAL ASSIGNMENT
F16401007
QN2:
An investment strategy is a set of rules, behaviors or procedures,

designed to guide an investor's selection of an investment portfolio.
Individuals have different profit objectives, and their individual skills
make different tactics and strategies appropriate. Some choices involve
a tradeoff between risk and return. Most investors fall somewhere in
between, accepting some risk for the expectation of higher returns.
A portfolio investment is a hands-off or passive investment of securities in

a portfolio, and it is made with the expectation of earning a return.
This expected return is directly correlated with the investment's expected risk.
Portfolio investment is distinct from direct investment, which involves taking a
sizable stake in a target company and possibly being involved with its day-to-
day management.
Even though with all this inflation rates hurts how much interest is
paid on a particular saving account and hence reduces the values of the
money you have for investment and also narrows the possible
investment strategies you can implore here are some strategies
available for a retired person with inflation rate against his money.
NOTE: each strategy builds a different portfolio depending on what goals
I have set hence the strategies can vary from high to low risk based:
Real estate investment trusts. Real estate investment trusts invest in

mortgages or direct equity positions in various properties. They pay dividends
to their investors, and that yield is usually higher than what you can get from
stock dividends. REITs are good investments to hold when the general stock
market is in decline. This is because REITs are not correlated with stock
exchanges, meaning that they are unlikely to go down with the rest of the
market.
Dividend-paying stocks. Many well-established companies pay dividends
on their stocks that are higher than what you can get on safe investments, such
as certificates of deposit and U.S. Treasury securities. Of course, being stocks,
they aren't as safe as fixed-income securities, but they do come with the
potential for capital gains.
This gives dividend-paying stocks a reasonable combination of growth and
income. In addition, a high dividend will enable you to ride out a prolonged
decline in the stock market, since you might continue to receive income on your
stock even if the underlying stock price fluctuates. Dividend-paying stocks
often do better than growth stocks in bear markets, since investors tend to shift
attention from growth to income. You could also purchase an index fund
comprised of numerous dividend-paying stocks. Even if you're mostly interested
in preserving your investment capital in retirement, having part of your portfolio
invested in dividend-paying stocks will provide you with ongoing income and
capital appreciation, which could help you deal with inflation.
Peer-to-peer lending. Better known as P2P, peer-to-peer lending has been
growing steadily since it began in 2005. Peer-to-peer lending takes place online
and matches borrowers and investors in loans that benefit both. It's basically
lending without using a bank as an intermediary. The two largest P2P lending
platforms are Lending Club and Prosper. Many P2P investments pay out a
higher interest rate than you are likely to get on your stock market investments.
However, the risk (and reward) can vary considerably based on who you lend
money to.
Floating rate bond ETFs are innovative debt funds that hold specific
types of bonds made up of two parts to arrive at a final yield—a variable
component, which correlates with a reference rate, and a spread. The
combination of these two components is the total yield, which
will float (fluctuate) over time. this float rate ETF from I Shares tracks an
index composed of U.S. dollar-denominated, investment-grade floating
rate bonds with remaining maturities between one month and five years.
And some of the reasons I Shares believes this is a good asset is the
fact that it gives investors exposure to U.S. floating-rate bonds, whose
interest payments adjust to reflect changes in interest rates. It also gives
you access to 300-plus shorter-term investment-grade bonds in a single
fund. This allows you to put cash to work and manage interest rate risk.
Annuities. Annuities are investment contracts between you and an

insurance company. They come in different forms, and usually include a
guaranteed return at a stated rate. An inflation-indexed immediate annuity is
a form of a fixed annuity. You receive a guaranteed stream of income
from the insurance company, and that income will rise each year based
a predetermined formula. The increase is usually tied to changes in
the consumer price index. An inflation-indexed annuity will provide a less
initial monthly income, but the monthly income will gradually increase
over time and as inflation continues. It should eventually surpass the
amount you would be receiving from an equivalent non-indexed annuity,
but it can take anywhere from 12 to 20 years for the monthly amount to
grow to the point it would have been at if you had taken a fixed non-
inflation payout from the start.
Inflation protected bonds fund. inflation protected bonds pay a fixed rate

of interest twice a year. If the principal is adjusted up due to inflation
then the fixed interest rate will be applied to the new higher principal
amount, and so a higher dollar amount of interest will be paid out. This
means if you own an inflation protected bond, and there is inflation, you
will see an increase in the interest income you receive from the bond.
Treasury inflation-protected securities. Treasury inflation-protected

securities, better known as TIPS, are another form of U.S. Treasury debt. What
separates them from other Treasury securities is that they pay the interest and
additional principal to compensate for inflation.
TIPS come in denominations of as little as $100, and in terms of five, 10 and 30
years. The annual inflation adjustment is based on changes in the consumer
price index. The percentage change in the value of the security is added to the
principal value, rather than being paid out like interest. When the TIPS mature,
you are paid the higher value based on the CPI. However, the value of your
TIPS could also drop if there is deflation.
Due to the inflation adjustment, TIPS pay lower interest rates than other U.S.
Treasury securities with comparable terms, but the inflation adjustment can
produce more attractive results. Like other Treasury securities, TIPS can also be
purchased and held through Treasury Direct.
There's no single investment that is the ideal retirement asset. The best
strategy is to have many different types of assets in your portfolio to prepare
your investments for different kinds of market environments.
It’s crucial to keep in mind that higher risk does NOT equal greater
return. The risk/return tradeoff only indicates that higher risk levels are
associated with the possibility of higher returns, but nothing is
guaranteed. At the same time, higher risk also means higher potential
losses on an investment.

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INVESTMENT BANKING INDIVIDUAL ASSIGNMENT

An investment strategy is a set of rules, behaviors or procedures,

A portfolio investment is a hands-off or passive investment of securities in

Real estate investment trusts. Real estate investment trusts invest in

Annuities. Annuities are investment contracts between you and an

Inflation protected bonds fund. inflation protected bonds pay a fixed rate

Treasury inflation-protected securities. Treasury inflation-protected

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