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Investment Decision: Nature and Scope

The document discusses the nature and scope of investment decisions. It defines investment as using money to purchase financial products or other assets with the goal of earning a profit in the future. Making investment decisions involves analyzing opportunities to determine costs and potential returns. Effective investment decisions require researching different investment avenues and constructing a diversified portfolio to reduce risk while aiming to meet objectives like returns, liquidity, and inflation hedging. The decision process should formalize rules for accepting or rejecting projects based on whether expected conditions and returns are met.

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597 views9 pages

Investment Decision: Nature and Scope

The document discusses the nature and scope of investment decisions. It defines investment as using money to purchase financial products or other assets with the goal of earning a profit in the future. Making investment decisions involves analyzing opportunities to determine costs and potential returns. Effective investment decisions require researching different investment avenues and constructing a diversified portfolio to reduce risk while aiming to meet objectives like returns, liquidity, and inflation hedging. The decision process should formalize rules for accepting or rejecting projects based on whether expected conditions and returns are met.

Uploaded by

abdu91
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Investment Decision

Nature and scope

Abdullah

Investment ....

In finance, the purchase of a financial product


or other item of value with an expectation of
favorable future returns.
In general terms, investment means the use
money in the hope of making more money.

Definition ..

Investment involves employment of own funds or


borrowed funds on a real or financial asset for a
certain period of time in anticipation of a return in
future.
Investments, on the other hand, is what helps you
to meet your longer term needs and larger
financial goals.
The investor can be an Individual, Government, or
a Corporation.

Objectives

The primary objective of any Investment is to


increase the rate of return and to reduce the risk.
However the other objectives of Investment include:
Return.
Risk.
Liquidity.
Hedge against Inflation.
Safety.

Investment decision..

A determination made by directors or the


management as to how, when, where and how much
capital will be spend on investment opportunities .
The decision often follows research to determine
costs and returns for each option
www.businessdictionary.com

Nature and Scope of Investment Decision .

To understand various investment avenues .

To know what are the good investments decisions .

You can take investment decision only after analyzing


entire process of investment that starts with funds
contribution and ends with getting expectations
fulfilled.

A well diversified Portfolio reduces Unsystematic risk


by a large way.

Continues.

Higher the Risk, Higher is the Expected Return.

Higher the time period of investment, lesser is the


uncertainties of Investment.

Investor prefers among securities which yield higher


return for the same risk or lower risk for the same return.

Investment decisions are based on Investment objectives


and Constraints.

Continues..

The investment decision rules allow you to formalize the


process and specify what condition or conditions need
to be met to accept the project.

Investment decisions are made only after ensuring that


the required expectations in terms of returns are
ensured at any cost.

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