Basic Indicators of Investment Activity and the Analysis of the Investment Activity

Topics: Value investing, Investment, Net present value Pages: 5 (1623 words) Published: May 4, 2013
Basic Indicators of Investment Activity and the Analysis of the Investment Activity Introduction.
Abstract. There is no company or a firm on the market that doesn’t invest its funds, moreover, investment activity is essential both on micro and macroeconomic level. That is why the project proposal of this very economic research is dedicated to pointing out of the basic indicators of investment activity and the analysis of investment activity in particular. The problem of the research dwells within the need of a proper analysis before actually making any investments as the whole sense of making investments lies in further acquisition of the profit. Thus the whole research is going to be focused on the methods of the analysis attached to investment activity while the goal of this project is going to be reached through and with the help of mathematical and statistical methods. Background of the study. As it has already been mentioned in the previous paragraph, investment activity is essential on any economic level. What is more, investments are the catalysts for any further economic development. However, still nothing is that obvious in this sphere as there are yet a lot of obstacles to overcome. Even though the importance of the investments is understood and cannot be doubted, too often many people fail decision making while actually investing. The most common and at the same time fatal mistakes are neglecting the inner side of the process and not paying attention to the analysis of what is up to be done. The problem statement. Taking into account everything that was indicated previously, it must be questioned what all these mistakes attached to investment activity are? Firstly, of course and again, lack of well-thought analysis. Secondly, people often neglect the fact that investments are risky and because of this they underestimate the risk itself or cannot maintain it properly. Thirdly, despite some investors understand the markets’ volatility and current economy’s state they are not always ready for the worst-case scenario. And finally, sometimes people tend to stick to just one kind of investment rather than diversify investments. Thus, in conditions of a modern market not only investors must estimate all risks but also try to minimize them by all means and, of course, be ready for everything. Of course, as a lot of experts stress, there is one other side that causes problems, this is people’s emotions and inability to cope with them, especially in emergent and crisis situations. However this side of the problem will not be discussed within the frames of my research for it seems psychological rather than economic, consequently it is not a field of my investigation. In summary, weighing everything that was previously mentioned, the problem of the research may sound like this: in order to make investments actually work right, one should analyze investment process itself; and that is where we need to pay attention to basic indicators of such activity, to outline them and learn how to make use of them. The main aim of the study is to point out these indicators and to find out how to provide the investment analysis with their help. Professional significance. Speaking about a novelty of the study, it is highly important to highlight current economic situation. In the times of instability and crisis, investment analysis becomes even more significant and must be deeply examined. Therefore I am sure that my research will help dealing with all those problems indicated above.

Main body
Literature review. The current study is based on a large body of literature on the investments and investment activity. The determination of a term “investment” is fully defined in the works of Benjamin Graham. In his terms, there is a fundamental distinction between investment and speculation. According to him "An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not...

Bibliography: 1. Graham B. The Intelligent Investor: – M.: HarperCollins. 2003, 4th ed.
2. Graham B., Dodd D. Security Analysis: – M.: McGraw-Hill. 2008, 6th ed.
3. Grayson L. Internal Rate Of Return: An Inside Look. // [on-line] URL: <>, 10.12.2010.
4. Kelleher J., MacCormack J. Internal Rate of Return – A Cautionary Tale // The McKinsey Quarterly // [on-line] URL: <>, 20.10.2004.
5. Markowitz, H.M. Portfolio Selection: Efficient Diversification of Investments: – M.: John Wiley & Sons. 1991, 2nd ed.
6. Renaud R. Which is a better measure for capital budgeting, IRR or NPV? // [on-line] URL: <>, 19.01.2007.
7. Ray J. Due Diligence – The Key To Every Investment.// [on-line] URL: <>, 2011.
[ 1 ]. Benjamin Graham (May 8, 1894 – September 21, 1976) was a British-born American economist and professional investor. Graham is considered the first proponent of value investing.
[ 2 ]. Harry Max Markowitz (born August 24, 1927) is an American economist and a recipient of the John von Neumann Theory Prize and the Nobel Memorial Prize in Economic Sciences.
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Essay on Investment Analysis
  • Investment Analysis Essay
  • Quantitative investment Analysis Essay
  • Essay on Risk Analysis on Investment Decisions
  • Investment Appraisal Essay
  • investment appraisal Essay
  • Investment Appraisal Essay
  • Return on Investment Essay

Become a StudyMode Member

Sign Up - It's Free