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    Investment decisions

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    This assignment is concerned with your understanding of the key issues relative to portfolio analysis and investment. In completing this assignment you are to limit your scope to the US stock markets only. Use the Library, the Internet, and course resources to write a 2-page essay which you will use with new clients of your financial planning business; the essay should address the following issues and/or practices:

    *How individual investors make investment decisions in practice rather than in theory; and
    *How investors manage their funds/savings/ investments in light of current stock markets.

    In your response, build upon extant portfolio theory and make sure to talk about different types of risks that investors might face and how they go about managing such risks. This means you need to consider topics such as efficient frontier and optimal portfolios; as well their relevance to investment theory. Furthermore, given the nature of the assignment, avoid bringing the brokerage industry into your discussion. In other words, assume you can invest directly in the stock market and do not need any financial intermediaries like brokerage houses.

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    Solution Preview

    The response addresses the queries posted in 913 words with references.

    //In the present time, there are many investment avenues available in the market according to needs and expectations of the investors. For investment decisions, the individuals use academic as well as practical aspect of the investment.//

    Investment decisions are very critical because there are many investment avenues in the market. Every investor focuses to minimize the risk and maximize the return. Thus, the investor wants to get maximum return with minimum risk at per dollar investment. For achieving the objective, investor should diversify his investment risk by making effective investment portfolio. The composition of the portfolio should be based upon the expected return and standard deviation of the security. According to the investment theory, the investors are risk averse. Therefore, they want to make a portfolio which has minimum risk (Brentani, 2004).

    It is true that there are many differences between theoretical and practical approach for investment, but still practical approach should be aligned with theoretical approach. The investors earn money with hard work. So they do not want to waste their money by investing just like that. Therefore, the appropriate market research is necessary before making an investment. In practical life, all the investment theoretical concepts are not applicable in the same manner. They are manipulated according to situations and needs.

    According to the theoretical theories of ...

    Solution Summary

    The response addresses the queries posted in 913 words with references.

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