Investment Analysis and Portfolio Management

Syukur Alhamdulillah n Horrrreeeeeeeeeeeyyyyyyyyyyy!!!!!!!!!!

finally, exam season is over.. but juz 4 dis sem, next sem ad lg..hmm~
tp yg paling bestnye, tonite xyah lg nk tido berselimutkan nota n past year questions, tido bermimpikan formula n rumus2, kalkulator etc..hehe

any way, I've finished my last paper exam just now dat is Investment Analysis and Portfolio Management paper.. I thought it's not too tough, tp rupa2nya very tough!!!! soalan susah tahap petala ke-8!!! ada ke patut question adapted from SOA exam???? bnda yg xblaja lgsg dlm kls bleh kuar exm??? eee~.. but never mind, it's already over.. nothing more I can do except doa je byk2 smoga Dr Saiful Hafizah baik aty turunkn ckt graf.. nsib baik je carry mark tinggi, klu x down lg~

since all de formula, rumus2 n sgala mcm ilmu abt investment ni still fresh at my mind, I think it's better if I'm share all those things here.. myb it can gve information 2 u all abt investment n portfolio..

ok, 1stly, wht is portfolio?? portfolio is combination of two @ more assets with a certain weight so that can reduce risk.. as we know, almost assets @ stocks and any others thing in our life as well have their risk.. but by use portfolio management, we can reduce the risk by diversification... nape plop diversification ni?? myb some people didn't know wht's dat..

let me gve a simple example.. ok, stock A have a high risk but can give also high return, while stock B have a lower risk and also lower return.. if u all as an investors, which stock u'll buy?? think 1st b4 read my explaination below...

ok, solutionnya... It's better if we get both stocks.. y?? coz by using diversification (kepelbagaian), we can buy both stocks but in certain weight, so dat the risk can be reduce.. logically, low risk + high risk = medium risk.. return dia plak kna kira by using it's formula la... W₁R₁+ W₂R₂ = R_p.... actually byk lg rumus2 yg kna gna utk dptkn return drp different risk, but the way I want to show u all is, "never put all eggs in one busket".. same with investment, never invest ur money in an asset, but put it in different asset sbg lgkh brjga2...

but, bear in ur mind, invest in different asset xsmestinya btul2 selamat.. kna tgk pula kpd thp korelasi @ kaitan antara kedua2 aset.. yg paling selamat klu both asset not related even juz a little corelation, n it's better if both asset have -ve correlation.. jd, klu 1 aset down, the other 1 xjatuh.. so selamat la duit yg kt invest 2...

if we talk abt investmnt, some people juz think abt stock (saham).. actually byk lg cbg2 invstmnt yg lain spt bond, opsyen etc... bond is a debt instrument that issued and must be paid back by monthly or certain period of time (named as coupon) with some interest... whoa..xsgka, ak ingt lg definitionnya..hehe~

terdpt juga zero coupon bond which is no need to pay back monthly @ certain period, juz pay at maturity date with interest + face value... face value 2 duit yg dipinjm xtrmasuk interest... maturity date plak tarikh perjnjian utk byk balik pnjaman... this is formula 4 zero coupon bond price, PV/ ( 1+r )^T....

simple example 4 contract bond, let say PLUS need some money 2 make a new highway.. but they hven't enough money abt RM50,000 to start dat project.. so PLUS will issued (jual) a bond to public, then get the money.. after 5 years, the highway is finished n PLUS get back their money from government or byrn tol yg dikenakan kpd pengguna highway.. then PLUS will pay back dat money to bond buyer plus some interest myb abt RM60,000..

hmm, bykkn benefit belajar investment ni, boleh biakkan duit.. drp simpn je dlm bank dgn interest xsmpai 3%, better la investkan je duit 2... tp pndai2 la nk invest kt mn, cri institusi pelaburan yg halal, bukan yg konvensional...

lastly, ak nk lampirkn some important formula utk blajar invstment ni.. biar korang tau belajar investmnt ni bukannye senang tau..hehe~

1 - ni dia rumus Black-Shcoles.. penat aku hafal..tp xkuar pn dlm exm..hampeh!!

2 - Capital Asset Pricing Model (teori perletakan harga),

E(r_i) = r_f + β_i(E(r_m) + r_f)

3 - Return 4 portfolio,

E(r_p) = W₁ E(r₁) + W₂ E(r₂),

where, W₁ = ( σ₂² – cov(r₁r₂) )/( σ₁² + σ₂² – 2cov(r₁r₂)),

and, W₂ = 1 – W₁

4 - Risk 4 portfolio,

σ_p² = w₁²σ₁² + w₂²σ₂² + 2w₁w₂Cov(r₁r₂)

"Orang bijaksana tidak sesekali duduk meratapi kegagalannya,
tapi dengan lapang hati mencari jalan bagaimana memulihkan kembali kerugian yang dideritainya"