Investment decisions refer to the decisions taken by the investment managers of a firm on the investment strategies and investment policies of the firm. After going through a proper and detailed investment analysis, the investors take up the investment decisions.
The various steps taken by the investors while taking up a particular investment decision are:
Calculating the fund of business
Determining the projects
Comparing the projects
Selecting the particular project
Running cost-benefit analysis of project
Approving the project
The investment decision is largely dependent on the investment analysis done by the business firms.
This is the process of calculating the market value of the various financial liabilities and assets of the company. The investment analysis is basically done by evaluating the marketable securities of the firm like options, stocks, intangible assets, liabilities and business enterprises.
The investment decisions are mainly driven by the purpose of earning the maximum profit from the available investment projects and also increasing the value of firm. The investment decisions are taken by the investors.
The various criteria that are taken up while taking the investment decisions are based on the type of the projects, the requirements of the projects, the return that is promised by the project, life time of a project and the duration of the return value of the project.
Judging the various projects and deciding on which project to take up are also included in the project ranking process.
The allocation of funds and capital to the various projects is the most important aspect of the investment decision of a firm.
The collected fund may play an obstacle in choosing the desired project, as the fund may be limited to support certain projects for a firm. The decision of investment on various projects is mainly based on the value they promise to add to the firm.
Last Updated on : 27th June 2013