Fin 402 - Investment Fundamentals and Portfolio Management

Asset Classes Paper

INVESTMENT FUNDAMENTALS AND PORTFOLIO MANAGEMENT FIN/402

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Introduction

When considering whether or not to invest in a security one of the most important considerations is the asset class of the security. Investments in a particular asset class would be expected to be effected similarly by market conditions. They should be expected to have a similar risk level and similar returns. Though assets in the same asset class are similar they will still have their own individual returns. One such asset class is stocks, two securities that fall into this asset class are the common stock for General Electric corporation and the Fidelity Aggressive Growth Fund.

General Electric

General Electric is a well diversified global conglomerate. It has many lines of business that it is involved in. It has a large portion of it's business tied to the retail market, but it has exposure in many different areas which also keeps it diversified. "General Electric Company (GE) is a diversified technology, media and financial services company. With products and services ranging from aircraft engines, power generation, water processing and security technology to medical imaging, business and consumer financing, media content and industrial products, it serves customers in more than 100 countries." (Google Finance, 2008). With this range of markets and opportunities that the firm touches upon the prospects for business can be very exciting. This can be an exciting opportunity for investors in the market. According to the 2007 financial statements for GE the largest business segment as far as revenue is their infrastructure segment. This includes businesses that involve aviation, energy, and transportation. According to that 2007 financial report, "Infrastructure revenues rose 23%, or $11.0 billion, in 2007 on higher volume ($7.9 billion), higher prices ($1.1 billion) and the effects of the weaker U.S. dollar ($0.8 billion) at the industrial businesses in the segment." (G.E. Annual Report, 2007). It would seem like the fundamentals of the business are doing well, but there are also some hard numbers we can look at. According to the 2007 financial report, "Per-share dividends of $1.15 were up 12% from 2006, following a 13% increase from the preceding year." (G.E. Annual Report, 2007). This is good news for investors in the stock as this increased dividend would lead one to believe that management believes the future of the firm is relatively secure. Additionally the earnings per share was higher in each quarter of 2007 than it was in the corresponding quarter of 2006. Also due to this business having