What is investment decision process?
An investment is the purchase of an asset with an expectation to receive return or some other income on that asset in future. The process of investment involves careful study and analysis of the various classes of assets and the risk-return ratio attached to it.
What is investment decision and example?
The two types of investment are long term and short term. An example of a long term capital decision would be to buy machinery for production. This is important as it affects the long term earnings of the firm. Short term investment is related to levels of cash, inventories, etc.
What are the steps involved in investment decision process?
The investment process is summarised in 5 key stages:
- Establishing portfolio objectives;
- Developing the strategic and tactical asset allocation;
- Manager research, selection and configuration;
- Portfolio implementation; and.
- Ongoing monitoring and due diligence.
What do you mean by investment decision process how is it going to help the investor in making sound investment decisions?
In other words, investment decisions are concerned with the question whether adding to capital assets today will increase the revenues of tomorrow to cover costs. Thus investment decisions are commitment of money resources at different time in expectation of economic returns in future dates.
What is portfolio investment process?
A portfolio investment is ownership of a stock, bond, or other financial asset with the expectation that it will earn a return or grow in value over time, or both. It entails passive or hands-off ownership of assets as opposed to direct investment, which would involve an active management role.
What is investment decision Class 12?
7. Investment Decision (Capital Budgeting Decision) This decision relates to careful selection of assets in which funds will be invested by the firms. Factors affecting investment/capital budgeting decisions are. Cash flow of the project.
What is the importance of investment decision?
Investment decisions have long-term implications on the company’s profit capacity and growth rate. These decisions will determine the role of the company in the future. The proper investment strategy will contribute to a significant influx of funds.
What are investment decisions in financial management?
Investment decisions are the financial decisions taken by management to invest funds in different assets with an aim to earn the highest possible returns for the investors. It involves evaluating various possible investment opportunities and selecting the best options.
What are the types of investment decision?
Various Types of Investment Decisions
- Inventory investment. It includes decisions taken by the firm for the procurement of an adequate amount of raw materials. …
- Replacement Investment. …
- Strategic Investment Expenditure. …
- Modernization Investment Expenditure. …
- Expansion Investment. …
- Expansion Investment on New Business.
What is investment decision explain the factors affecting on investment decision?
Investment Decisions: Investment Decision relates to the determination of total amount of assets to be held in the firm, the composition of these assets and the business risk complexions of the firm as perceived by its investors. It is the most important financial decision.
What do you understand by investment process explain the factors affecting investment policy?
Summary – Investment levels are influenced by:
Confidence/expectations. Technological developments (productivity of capital) Availability of finance from banks. Others (depreciation, wage costs, inflation, government policy)