Introduction to Investment Analysis and Portfolio Management

Investment analysis and portfolio management are crucial areas in finance that deal with the evaluation and management of investment opportunities. In this chapter, we will cover the basic concepts of investment analysis and portfolio management, focusing on key theories, methodologies, and practical applications. Investment analysis involves assessing various investment options to determine their potential returns and risks. This process includes analyzing financial statements, market trends, and economic indicators. Portfolio management, on the other hand, refers to the process of building and maintaining an investment portfolio to meet specific financial goals. This involves selecting the right mix of assets, diversifying investments, and continuously monitoring the portfolio's performance. To effectively manage a portfolio, investors must understand various investment strategies and risk management techniques. We will explore concepts such as asset allocation, modern portfolio theory, and performance evaluation metrics. Additionally, the chapter will provide an overview of fundamental analysis and technical analysis—two key approaches to evaluating investment opportunities. By the end of this chapter, readers should have a solid foundation in investment analysis and portfolio management, enabling them to make informed investment decisions and effectively manage their investment portfolios.