MSG Team's other articles

9365 Flipkart Circumvents India’s FDI Norms

The Indian government has been defensive about opening up its retail sector to global companies such as Wal-Mart and Amazon. This is the reason why the country only permits 100% foreign direct investment in single-brand retail. This means that companies like Levis or Benetton can own and operate stores because they only sell one single […]

10808 Pros and Cons of Freemium Model

In the previous article, we have already learned what a freemium business model is. We now know that this model is widely used amongst the start-up community. We also know that this business model has several variations. In this article, we will have a closer look at what are the pros and cons of a […]

10107 Technology Risks In Commercial Banking: KfW Bank Case Study

The speed at which commercial banking is being automated is astounding. The automation process is about two decades old. However, over time, many difficult processes have been automated. However, commercial banks have realized that automation can be a double-edged sword and can sometimes lead to spectacular blunders which can impact the reputation of the bank. […]

12690 Challenges Faced by Commercial Banks

Commercial banking has been around for a very long time. Ever since the birth of corporations more than three centuries ago, banks have been providing services to large corporations in one form or the other. Over the years, the commercial banking model has been relatively stable. Of course, with the passage of time, newer and […]

10252 Managing the Cash Burn Rate

The concepts of cash burn and cash burn rate are relatively new to the investor as well as to the entrepreneur committee. Hence, even though investors have gradually started accepting cash burn to be a normal part of setting up certain types of businesses, they are not really aware of how it needs to be […]

Search with tags

  • No tags available.

What is a Security ?

Assets with some financial value are called securities.

Characteristics of Securities

  • Securities are tradable and represent a financial value.
  • Securities are fungible.

Classification of Securities

  • Debt Securities: Tradable assets which have clearly defined terms and conditions are called debt securities. Financial instruments sold and purchased between parties with clearly mentioned interest rate, principal amount, maturity date as well as rate of returns are called debt securities.

  • Equity Securities: Financial instruments signifying the ownership of an individual in an organization are called equity securities. An individual buying equities has an ownership in the company’s profits and assets.

  • Derivatives: Derivatives are financial instruments with specific conditions under which payments need to be made between two parties.

What is Security Analysis ?

The analysis of various tradable financial instruments is called security analysis. Security analysis helps a financial expert or a security analyst to determine the value of assets in a portfolio.

Why Security Analysis ?

Security analysis is a method which helps to calculate the value of various assets and also find out the effect of various market fluctuations on the value of tradable financial instruments (also called securities).

Classification of Security Analysis

Security Analysis is broadly classified into three categories:

  1. Fundamental Analysis
  2. Technical Analysis
  3. Quantitative Analysis

What is Fundamental Analysis ?

Fundamental Analysis refers to the evaluation of securities with the help of certain fundamental business factors such as financial statements, current interest rates as well as competitor’s products and financial market.

What are Financial Statements ?

Financial statements are nothing but proofs or written records of various financial transactions of an investor or company.

Financial statements are used by financial experts to study and analyze the profits, liabilities, assets of an organization or an individual.

What is Technical Analysis ?

Technical analysis refers to the analysis of securities and helps the finance professionals to forecast the price trends through past price trends and market data.

What is Quantitative Analysis ?

Quantitative analysis refers to the analysis of securities using quantitative data.

Difference between Fundamental Analysis and Quantitative Analysis

Fundamental analysis is done with the help of financial statements, competitor’s market, market data and other relevant facts and figures whereas technical analysis is more to do with the price trends of securities.

What is Portfolio Management ?

The stream which deals with managing various securities and creating an investment objective for individuals is called portfolio management. Portfoilo management refers to the art of selecting the best investment plans for an individual concerned which guarantees maximum returns with minimum risks involved.

Portfolio management is generally done with the help of portfolio managers who after understanding the client’s requirements and his ability to undertake risks design a portfolio with a mix of financial instruments with maximum returns for a secure future.

Portfolio Theory

Portfolio theory was proposed by Harry M. Markowitz of University of Chicago. According to Markowitz’s portfolio theory, portfolio managers should carefully select and combine financial products on behalf of their clients for guaranteed maximum returns with minimum risks.

Portfolio theory helps portfolio managers to calculate the amount of return as well as risk for any investment portfolio.

Article Written by

MSG Team

An insightful writer passionate about sharing expertise, trends, and tips, dedicated to inspiring and informing readers through engaging and thoughtful content.

Leave a reply

Your email address will not be published. Required fields are marked *

Related Articles

The Perils of the Immediacy Trap and Why we can and cannot do without it

MSG Team

What are Bonds? – Characteristics and Different Types of Bonds

MSG Team

What are Market Indices ?

MSG Team