Summary Business Management 142

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EHAkEEA0tHE INVESTMENT SPECULATION

TERM
longterm 154AM ] Short term 11-2 Years @ the most ]
>
GAMBLING :
no knowledge of outcome of decision 1.



> a motive Require reasonable return Require considerable return
SPECULATION :
promise of great returns but v. risky


>
INVESTMENTS :
reasonable return ,
less risky


INVESTMENT OBJECTIVES
> [property ,
stocks , options , cattle ]


> SPECULATIONS :
buying asset w/ goal to sell for a substantial profit w/ in 1 year / HIGH RISK ]


> INCOME :
buy asset w/ aim to generate income / property -
rental shares -
dividend fixed deposit -
interest ]


> CAPITAL GROWTH :
buy house R 500000 t sell after 10 yrs for R 5.5m / R5 mil capital growth ]
→
purpose =
protect purchasing pwr of capital


>
TAKE OVERS -
+ MERGERS :
buy 2ⁿᵈ neighbouring farm farm more effectively


CONTROL OVER RAW MATERIAL DISTRIBUTION CHANNEL set of interdependent organizations involved in process of making product / service avail for use / consumption
> :
a .




Financial instruments t securities :
blue chips corporate actions :




shares ,
bonds + gilts capitalisation / bonus shares / issue



securities exchange Portfolio diversification
,
+ risks corporate actions :




subdivisions /stock splits / + Share consolidation



Strate dematerialisation
,
institutional investors + Unit trust corporate actions :
rights issue cum rights,
IMPORTANT CONCEPTS

ex rights Underwriting
.
+ share buy back-




1-




capital vs. Money market listing +
arbitrage corporate actions :
TERMINOLOGY
share buy back
pre listing statements
-
-




primary us .
Secondary market bull us .
bear markets fundamental us .
technical analysis

bulls bears + Stags
prospectus ,




Share Price Market Price corporate actions dividends ; interim: -
final -




,
annual saving financial investment economic investment
, ,
,


dividends , cum / ex dividend




FINANCIAL INSTRUMENTS :




collective terms all assets / units of capital tht tradable
◦
: =




emphasis tractability of the value paper / ability to transfer ownership ]
•
=
on



FINANCIAL SECURITIES :




-

financial instruments tht represent :




◦
investment as owner in Corporation I stock) ,
or



•
creditor relationship w/ Corporation / gov body ( bond )
.
,
or




•
rights to ownership ( option )



emphasis On guarantee function other assets ie ability of value papers to serve as guarantee / security w/ applying for loans overdraft facilities etc
=
+ . .

,




}
>
securities under equity -
based financial instruments : shares
normally :
all stocks + bonds =
serve as security + non -
traceable paper
9 life insurance policies t assets [ property ]

>
securities under debt -
based financial instruments :
bonds

debenntures
gilts
issued by corp gov / quasi gov institutions
→
traceable debt instruments . .
-

.




9

'
☒⑥ ADDS Gti KISS issued by state / semi institutions
'
SHARE§ capital of Consists of *
state
'
:
Sml units of ownership tht the a comp .
>
debt instruments -




◦
ORIGINATED DUE TO :
seeking lrg ants of money limited liability BOND CHARACTERISTICS :
LOANS tht =
repaid on future date ( maturity date )


SHARE CERTIFICATES : [ issued to purchaser of shares ] FIXED INTEREST =
paid periodically to owner




I. document issued to shareholder [ by company ] as proof of ownership MRKT PRICE dependent on fluctuations in int . rates



•
disappeared due to dematerialisation GILTS EG :
RSA 's t Eskom gilts



s shares =
purchased electronically + held in electronic record