Investment analysis and portfolio management is the field that covers different investment decisions and management of pool of different suitable investments in the form of portfolio. There are a number of different investment alternatives and each one has its own features. In this area investment options are analyzed and evaluated on the basis of their potential to generate effective revenue for longer period of time. In recent world risk is common element that is present almost in every investment.
Risk and return analysis in Financial Management is related with the number of different uncorrelated investments in the form of portfolio. It is an overall risk and return of the portfolio.
Capital budgeting techniques are related to investment in fixed assets. Fixed assets are that portion of balance sheets which are long term in nature. On the other hand current assets are short term by nature. We may also said that capital budgeting is technique employed to determine the value of project and investment in fixed assets.
Earnings per Share (EPS) Pricing Model is useful method of calculating value of Common Stock on the basis of the cash flows generated by the company whose shares are under consideration. In other models the main concept is to ascertain the value of share on the basis of the cash flows associated with it. But in Earnings per Share (EPS) Pricing Model the concept is quite different in which the estimated fair present price of share is calculated from the anticipated future cash flows of the earnings of the company & from growth of its ploughed back reinvestment (retained earnings). The reason behind this new concept is that it is clear that the value of share (direct claim security) is associated with some underlying real asset. In case of share the assets of the company & the cash flows generated by it are regarded as underlying real assets.
Common stock is the types of stock or shares, which are for the general public and anybody can buy them. The values of Stock/share differs on the basis of the types of stock under consideration. There are two Types of Stock.