Considerations Before Making Investments

Topics: Investment, Net present value, Rate of return Pages: 4 (1016 words) Published: August 25, 2010
Investment has got a various number of definitions related to in which context it taken. In our case , we are going to take two contexts to give a definition to this term of “ Investment ’’ In Business Management , Investment can be defined as a tangible assets like equipments, machinery and buildings and intangible assets like patent, goodwill and copyrights . Making a decision for investment is known as capital budgeting decision, regarded as one of the important and key decision. In Finance, Investment can be defined as the purchasing of financial assets and securities from capital market , or buying money market or real properties with high market liquidity. Examples silver, gold, precious items, real properties. Direct financial investments are in bonds, stock and others forms of security investment. Before making any investment, there are many things the company has to take in consideration . It necessary for the company to know how the financial system is still working before investing money carefully , as investing is an important part of the financial planning process. 1. Understanding of law of “ Supply and Demand”

Before making an investment in the stock market , the company should have a good understanding of law and economics principles . Supply and demand is very essential and something the company must know before investing money into the stock market correctly. When the demand of the products of the company is high , the stock price will probably rise. If the company invest in something that offers products that are greatly used , the company is making a good and wise choice, but before all the process be taken , a deep investigation is necessary to check if the products offered will still stay continuously in high demand. 2. Quality Research

A quality research is another important factor to consider when the company wants to make an investment. The company can show...
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