The Process

of
Investment
Prescylea T. Bohol
Hyacinth Fe Y.
Tamparong

WHAT IS
INVESTMENT?
In Finance, it

is the purchase of
a
financial
product or other
item
of
value
with
an
expectation
of
favorable future
returns.

In Business,

it
is
the
purchase by a
producer of a
physical good in
the
hope
of
improving future
business.

In economics, it is the

utilization of resources in
order to increase income or
production output in the
future.

TYPES:
Securities or Property
Securities: stocks, bonds, options
Real Property: land, buildings
Tangible Personal Property: gold,
artwork, antiques

Direct or Indirect
Direct: investor directly acquires a claim
Indirect: investor owns part of a portfolio

Debt, Equity or Derivative Securities

Debt: investor lends funds in exchange for
interest income and repayment of loan in
future (bonds)
Equity: represents ongoing ownership in a
business or property (common stocks)
Derivative Securities: neither debt nor
equity; derive value from an underlying asset
(options)

Low Risk or High Risk

Risk: chance that actual investment returns

will differ from those expected

Short- Term or Long-Term

Short-Term: mature within
one year
Long-Term: maturities of
longer than a year

PROCESS:

WHAT IS
SAVINGS?
it is the process of setting
aside a portion of current
income for future use.

IMPORTANCE OF SAVING MONEY:

Emergency Cushion
Retirement

Average
life
Expectancy
Peace of Mind
Education

Business Activities :
Operating activitiesinclude the production, sales,
and delivery of the company's product as well as
collecting payment from its customers.
Investing activities include purchases or sales of an
asset(assets can be land, building, equipment,
marketable securities, etc.), loans made to suppliers or
received from customers, payments related to mergers
andacquisitions, anddividendsreceived.
Financing activities include the inflow ofcashfrom
investors, as well as the outflow of cash to
shareholdersas dividends as the company generates
income.

Business Activities
as a Cycle
Expansion
is the phase of thebusiness cyclewhen the economy moves from atrough
to a peak. It is a period when the level of business activity surges and
gross domestic product(GDP) expands until it reaches a peak. A period of
expansion is also known as aneconomic recovery.

Contraction

is a phase of thebusiness cyclein which the economy as a whole is in

decline. More specifically, contraction occurs after the business cycle
peaks but before it becomes atrough.

Business Activities
as a Cycle
Expansion
is a period of increasing business activity signaling the end of a recession.
Much like a recession, an economic recovery is not always easy to
recognize until at least several months after it has begun.