- The first component of a portfolio is “STOCK” which means that the owner of the stock is a part owner of the company. The second component is “BOND” which means are issued by governments and corporations when they want to raise money. And the last one is “ALETERNATIVE INVESTEMENT” which means they may assets whose value can grow and multiply, such as gold, oil, and real estate.
2. What are the three major of Stock? Define/explain each.
- The first major of Stock is “COMMON STOCK” these are the shares that you quoted prices for online, in newspaper, or financial publications. The second major of Stock is “PREFERRED STOCK” in this major it gives investors some level of ownership in a company, but preferred shareholders do not have voting rights. The last major of Stock is “SHARE CLASSES” which means within the boundaries of common or preferred shares there are different share classes.
3. What are the types of bonds? Define/explain each.
- There are two basic types of bonds. The first one is called “GOVERNMENT BOND” and also the second is “CORPORATE BOND”. When you invest in government bonds, it means that you are lending money to the government. And Corporate Bond issuance came from various sectors, mostly banks, real estate and telecommunication companies, toll way operators and beer based conglomerate.
4. What are the types of portfolio? Explain each.
- The first type of portfolio is AGGRESSIVE PORTFOLIO it includes those stock with a high-risk/high-reward proposition. Most companies with aggressive stock offerings are in the early stages of growth and have a unique value proposition. - The second type of portfolio is DEFENSIVE PORTFOLIO it is prudent for most investors. It does not usually carry a high beta and are fairly isolated from broad market movements. - The third type of portfolio is THE INCOME PORTFOLIO it is a nice complement to most people’s pay check or other retirement income. Investors should be on the lookout for stock that have fallen out of favour and have still maintained a high dividend policy.
5. What are the objectives of the portfolio? Explain each.
- PORTFOLIO is the first objective and it is a group of financial assets such as shares, stocks, bonds, debt instruments, mutual funds, cash equivalents. - SAFETY is the second objective and some individuals invest with an objective in keeping their money safe, irrespective of the rate of return they receive on their capital. - GROWTH is the third objective, while safety is important objective for many investors; a majority of them invest to receive capital gains, which mean that they want the invested amount to grow. - INCOME the fourth objective, some individuals invest with the objective of generating a second source of income. Consequently, they invest in product that offer returns regularly like bank fixed deposits, corporate and government bonds, etc,..