Podcast
Questions and Answers
Which economic theory posits that tax cuts for investors stimulate the economy by incentivizing increased supply of goods, with benefits reaching the broader population?
Which economic theory posits that tax cuts for investors stimulate the economy by incentivizing increased supply of goods, with benefits reaching the broader population?
- Demand-side economics
- Monetary policy
- Trickle-down economics
- Supply-side economics (correct)
What is the primary driver of economic growth according to demand-side economics?
What is the primary driver of economic growth according to demand-side economics?
- Tax incentives for corporations
- Increased governmental regulation
- High demand for products and services (correct)
- Decreased consumer spending
Which of the following emerging trends involves using artificial intelligence to manage investment portfolios?
Which of the following emerging trends involves using artificial intelligence to manage investment portfolios?
- Quantitative easing
- AI-powered robo advisors (correct)
- Algorithmic trading
- High-frequency trading
Gen Z's growing adoption of which investment strategy reflects a desire to replicate the portfolios of experienced traders?
Gen Z's growing adoption of which investment strategy reflects a desire to replicate the portfolios of experienced traders?
Within the context of investment strategies, which approach to portfolio construction directly addresses concerns related to sustainability and ethical considerations, influencing both investment selection and corporate governance?
Within the context of investment strategies, which approach to portfolio construction directly addresses concerns related to sustainability and ethical considerations, influencing both investment selection and corporate governance?
Which of the following best describes the difference between common stock and preferred stock?
Which of the following best describes the difference between common stock and preferred stock?
What does buying bonds represent from the buyer's perspective?
What does buying bonds represent from the buyer's perspective?
Which of the following is a DISADVANTAGE of investing in mutual funds?
Which of the following is a DISADVANTAGE of investing in mutual funds?
An investor with high risk tolerance, high access to capital, and looking for the QUICKEST profit should consider which investment strategy?
An investor with high risk tolerance, high access to capital, and looking for the QUICKEST profit should consider which investment strategy?
Which investment strategy involves investing a fixed amount of money at regular intervals, regardless of the asset's price?
Which investment strategy involves investing a fixed amount of money at regular intervals, regardless of the asset's price?
What overarching principle defines value investing?
What overarching principle defines value investing?
Which of the following trends are shaping the current investment landscape at the same time?
Which of the following trends are shaping the current investment landscape at the same time?
An investor is considering two different mutual funds: Fund A and Fund B. Fund A has lower expense ratio but a portfolio concentrated in a single industry, whereas Fund B has a HIGHER expense ratio but a well-diversified portfolio across multiple sectors. If the investor's primary goal is to minimize risk and achieve steady returns over the long term, which fund would be more suitable, and why?
An investor is considering two different mutual funds: Fund A and Fund B. Fund A has lower expense ratio but a portfolio concentrated in a single industry, whereas Fund B has a HIGHER expense ratio but a well-diversified portfolio across multiple sectors. If the investor's primary goal is to minimize risk and achieve steady returns over the long term, which fund would be more suitable, and why?
Which of the following best describes the primary focus of the module?
Which of the following best describes the primary focus of the module?
What is the purpose of the first learning outcome of this module?
What is the purpose of the first learning outcome of this module?
A client is seeking advice on how to protect their income in case of long-term illness. Which learning outcome would be MOST relevant in guiding your advice?
A client is seeking advice on how to protect their income in case of long-term illness. Which learning outcome would be MOST relevant in guiding your advice?
Which assessment focuses primarily on testing the student's breadth of knowledge across the entire module?
Which assessment focuses primarily on testing the student's breadth of knowledge across the entire module?
What percentage of the individual presentation grade is based on the effective use of presentation software?
What percentage of the individual presentation grade is based on the effective use of presentation software?
Which of the following BEST describes the CORE purpose of investment, applicable across finance, business and economics?
Which of the following BEST describes the CORE purpose of investment, applicable across finance, business and economics?
A student delivers a technically accurate presentation but struggles to maintain eye contact and speaks in a monotone. Which assessment criteria would be MOST affected?
A student delivers a technically accurate presentation but struggles to maintain eye contact and speaks in a monotone. Which assessment criteria would be MOST affected?
In personal financial planning, what is the INITIAL and MOST critical step an individual should undertake before making any investment decisions?
In personal financial planning, what is the INITIAL and MOST critical step an individual should undertake before making any investment decisions?
A student is struggling to grasp the concept of asset allocation. Considering the module structure, which learning activity would likely provide the MOST immediate and direct support?
A student is struggling to grasp the concept of asset allocation. Considering the module structure, which learning activity would likely provide the MOST immediate and direct support?
If a student calculates that assessment 1 is worth 60% of their final grade, and the individual project is worth 40%, what implicit assumption are they making, and why might this assumption be flawed?
If a student calculates that assessment 1 is worth 60% of their final grade, and the individual project is worth 40%, what implicit assumption are they making, and why might this assumption be flawed?
Which of the following is NOT typically considered a primary benefit of a well-diversified investment portfolio?
Which of the following is NOT typically considered a primary benefit of a well-diversified investment portfolio?
Among the following investment options, which is generally considered a DEBT investment?
Among the following investment options, which is generally considered a DEBT investment?
What distinguishes preferred stock from common stock in terms of claims on a company's assets and earnings?
What distinguishes preferred stock from common stock in terms of claims on a company's assets and earnings?
An investor is considering purchasing shares of a company. What fundamental right does owning common stock typically grant to the shareholder?
An investor is considering purchasing shares of a company. What fundamental right does owning common stock typically grant to the shareholder?
An investment promises high returns with seemingly minimal risk. According to modern portfolio theory and general investment principles, what is the MOST likely explanation or implication?
An investment promises high returns with seemingly minimal risk. According to modern portfolio theory and general investment principles, what is the MOST likely explanation or implication?
A seasoned investor tells you, 'The market is perfectly efficient; therefore, it's impossible to achieve consistently above-average returns without taking on significantly higher risk or possessing inside information.' What concept are they alluding to, and what is a critical assumption underlying this statement?
A seasoned investor tells you, 'The market is perfectly efficient; therefore, it's impossible to achieve consistently above-average returns without taking on significantly higher risk or possessing inside information.' What concept are they alluding to, and what is a critical assumption underlying this statement?
Flashcards
Investment
Investment
The study of how money is managed and used to create wealth.
Investment Risk
Investment Risk
The chance that an investment's actual return will differ from the expected return.
Financial Markets
Financial Markets
Platforms where buyers and sellers trade assets like stocks and bonds.
Financial Protection Products
Financial Protection Products
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Asset Classes
Asset Classes
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Ethical Investment
Ethical Investment
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Asset Allocation
Asset Allocation
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Taxation Considerations
Taxation Considerations
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Role of Investment in Personal Finance
Role of Investment in Personal Finance
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Long-Term Growth Potential
Long-Term Growth Potential
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Income Generation
Income Generation
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Diversification of Assets
Diversification of Assets
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Debt Investment
Debt Investment
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Equity Investments
Equity Investments
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Stock
Stock
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Supply-Side Economics
Supply-Side Economics
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Demand-Side Economics
Demand-Side Economics
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Securities Markets
Securities Markets
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Quant Funds
Quant Funds
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ESG Investing
ESG Investing
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Preferred Stock
Preferred Stock
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Common Stock
Common Stock
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Bond
Bond
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Mutual Fund
Mutual Fund
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Investment Strategy
Investment Strategy
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Value Investing
Value Investing
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Momentum Investing
Momentum Investing
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Dollar-Cost Averaging
Dollar-Cost Averaging
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Study Notes
- Investment and Risk Module is in collaboration with Coventry University
- Weekly learning activities for the module include lectures, seminars, practical workshops, and Q&A sessions
- Lectures are per 2 hours
- Seminars are for 2 hours
- Practical workshops are per 2 hours
- Q&A Sessions are per 1 hour
Assessment
- Assessment 1 is a 1-hour closed-book in-class assessment with 40 multiple-choice questions on March 13th, 2024, and non-financial calculators are allowed
- Assessment 2 is a 15-minute individual presentation project, with the date to be confirmed (TBC)
- For assessment 2, students will need to prepare and submit an Excel spreadsheet along with their slides
Assessment Criteria
- Content is worth 40%
- Clear and coherent structure and organisation make up 20%
- Creativity is 20%
- Communication skills are 10%
- Timeliness comprises 10%
Module Topics (Weekly)
- Introduction to Investments with the basics of the investment world
- Asset classes and investment instruments overview
- Trading in markets and how trading occurs in financial markets
- Investment funds which includes an introduction to mutual funds and similar products, with tax considerations
- Risk and return and the balance between risk and potential gains
- Diversification principles and the concept and benefits of diversifying investments
- Pricing models and theories explaining investment pricing
- Market efficiency and a discussion on how efficient the markets are
- Behavioral finance and the impact of psychology on investment decisions
- Insurance and protection and the role of insurance in financial planning
- Ethical investing with a focus on ethics and social responsibility
Investment
- Investment is used in finance, business, and economics
- Investment involves allocating resources like money, time, or effort to generate future benefits or returns
- Investment plays a significant role in personal financial planning because it is a long-term perspective
- A person should identify asset allocation, risk tolerance, financial goals, current financial condition, and investment time horizon
- The benefits of investing include long-term growth potential, income generation, and diversification of assets
Types of Investments
- Debt investments include CDs, angel investments, and treasury bills
- Equity investments include equities (stocks) and fixed-income (bonds)
- Hybrid investments include real estate, cryptocurrencies, commodities, hedge funds, pension funds, and ETFs
Stocks
- Stocks are a security indicating the holder's proportionate ownership in the issuing corporation
- Stocks are predominantly sold on stock exchanges
- A shareholder is a person, company, or institution owning at least one share of a company's stock
Preferred Stock
- Holders generally do not have voting rights
- Holders have a higher claim on assets and earnings than common stockholders
- Owners receive dividends before common shareholders and have priority in liquidation
Common Stock
- Entitles the owner to vote at shareholder meetings
- Entitles the owner to receive any dividends paid out by the corporation
Bonds
- A bond is a fixed-income instrument that represents a loan from an investor to a borrower
- From the seller's perspective, selling bonds is a way of borrowing money
- From the buyer's perspective, buying bonds is an investment to guarantee repayment of principal and interest payments
Mutual Funds
- Mutual funds pool money from many people to buy stocks, bonds, or other securities
- Managed by a professional money manager to provide tailored portfolio strategies stated in the fund's prospectus
Pros of Mutual Funds
- Liquidity
- Diversification
- Professional management
- Minimal investment requirements
Cons of Mutual Funds
- High fees, commissions, and other expenses
- Large cash presence in portfolios
- Lack of transparency in holdings
- Difficulty in comparing funds
Investment Strategies
- An investment strategy guides investment decisions based on your risk tolerance, investing style, long-term financial goals, and capital access
- Value investing involves investing in stocks that are trading below their intrinsic value
- Growth investing focuses on companies expected to grow above average
- Momentum investing involves buying assets that have shown a positive price trend
- Dollar-cost averaging entails investing a fixed amount of money at regular intervals, regardless of asset price
Choosing Strategies
- Momentum trading is for those seeking quick profits with high risk
- Value stocks are better for long-term planning
Trends in Investing
- Current trends include:
- Generative artificial intelligence
- REITs (real estate investment trusts)
- Small-cap stocks
- High-interest rates
Market Dynamics
- Supply is a policy made famous by President Ronald Reagan, based on the theory that more tax cuts for investors, corporations, and entrepreneurs provide incentives for investors to supply more goods
- Demand is the creation of effective economic growth from the high demand for products and services
- Consumer spending grows if demand for goods and services increases
- Businesses expand and employ additional workers when demand is high
- Securities markets involve economic models and theories to account for market dynamics by capturing as many variables as possible
Top Investment Trends (2024 & 2025)
- AI powers the next generation of Robo advisors
- Quant funds post sizable gains
- ESG becomes an essential investment strategy
- Alternative investments lead to non-traditional portfolios
- Uncertainty amid optimism in the cryptocurrency sector
- There is a new way to invest in real estate
- Gen Z drives continued interest in copy trading
- Investors renew their interest in global markets
- Fixed-income investments offer stability and high returns
Investment platform awareness in America
- 8% are already invested in alternative assets
- 12% are aware of existing digital platforms
- 80% have either never heard of a platform or don't know much about them
Knowledge of alternative investment platforms by generation
- Gen Z: 30%
- Millennials: 26%
- Gen X: 17%
- Boomers: 13%
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Description
Investment and Risk module overview in collaboration with Coventry University. Includes lectures, seminars, practical workshops and Q&A session. Topics include introduction to investments, asset classes, and in-class assessment.
