Definition of Investment

SUBMITTED TO:- SUBMITTED BY:-

DR. KHUJAN SINGH AMARJEET MOOND 15103046 M.com (F)

PRESENTATION ON INVESTMENT

Definition of Investment

‘’Investment mean sacrificing some money value in the present with the expectation of making gain in the future’’.

Dimension of Investment

Element of sacrifice

Element of futurity

Risk Expectation of gains

Continue… Element of sacrifice = As soon as a person makes a commitment of some money value either in buying shares, piece of land, plant, etc., it entails an element of sacrificing current consumption of money value.

Element of futurity = Every investment is made with the aim of holding it for a certain time period. Few investor hold it for a few days, whereas other hold it for certain months or years.

Risk = since every investment activity has an element of futurity and the future is always uncertain, it include the risk factor.

Expectation of gains = no investment is done for charity. The element of sacrifice of the current utility of money value , futurity and the risk monetary loss put together, makes the basis for expecting gains from the invested money.

Concepts• Pure Investment

• Speculation

• Gambling

Pure Investment Carefully thought of

Well-planned

Based on the study of fundamental about investment avenues

Meant for long-time horizon

Low risk

Expected returns commensurate with the risk assumed

SpeculationMeant comparatively for a shorter duration Based on market-related information

An act in which an investor has an attitude to take risk as compared to risk aversion

A positive attitude toward losses, in case of adverse happenings

Ready to book loss

Gambling It like batting for an uncertain outcome. In gambling , the investor is always ready to take risk high degree of risk and at it. He creates a situation leading to risk and then assumes the risk so created. A gambling always expects higher gains in a very short time horizon due to the high degree of risk assumed.

Investment ObjectivesSafetyRegularity of incomeCapital gainTax savingsLiquiditySpeculationHedgingArbitrage

Risk in Investment Systematic risk

Non-systematic risk

Systematic RiskInflation risk

Interest rate risk

Political risk

Market risk

Risk due to government policies

Continue….Natural calamities

Monsoon

Industrial growth or output

International events

War-like situation/Internal peace

Non-systematic RiskBusiness Risk

Financial Risk

Risk due to industry-specific policies

Disputes

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