What is Investment Analysis in MBA? The subject Investment analysis is considered as a method of review an investment to ensure its profitability and risk involved. It has defined specific measuring rules about how the given investment is suitable and convenient for investment.
Investment analysis procedure steps :
- Identification of investment opportunity
- The present value of the asset and future projected cash flows
- Comparison between the present value of cash flows to the amount of investment
Investment objectives and purpose is based on :
- Return attainable – Income from investment.
- Associated Risk – Risk associated with investment depends upon the variability of returns from different alternative investments.
- Liquidity – This is dependent upon marketability and trading facilities linked with an investment. It also indicates how easily the given assets can be converted in the form of liquid cash.
- Impact of Inflation – The criteria of Returns from investments keep the property safe from inflation impact and its tendencies related to the present economic status.
- Contribution in Safety – Alternative Investment is subjected to a strong legal and regulatory structure.
The process of Investment policy depends on the following aspects :
- Funds and
- Knowledge associated with the investment
Analysis of Investment deals with the following criteria –
- Industry and
- Company Analysis
- Valuation – Industrial and Future Value
- Creation of Portfolio – for creation the following factors are to be considered
- Selection and
- allocation of funds
This provides an optimum mix of various debt and equity. If you are doing MBA courses and got investment analysis assignment then contact to our online agent 24×7 available or send your assignment requirements in our email and we will assist you with best quality from – No 1 Assignment Help.
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Evaluation of portfolio includes :
- Appraisal and Revision
- Defining Investment policy – Before making any investment one must formulate an investment policy for systematic functioning –
The main components of an investment policy include –
- Funds that can be invested – Availability of funds, Source of funds, i.e. Savings or borrowing. The rate of return of the investment must be higher than the borrowing rate
- Investment Objectives – the Required rate of return, Need for regular income, risk perception, need for liquidity, capital appreciation or safety of principle
- Knowledge of Investment – One should be aware of different investment alternatives, various stock markets, and the financial structure of the country and must have sufficient knowledge regarding the functions of brokers, taxes, and charges.
- Analysis of Investment – After a suitable investment policy has been formulated, the next step is to conduct market, industry as well as company analysis to scrutinize the securities one plans to buy.
- Market Analysis – It helps an investor to understand the present economic scenario. Economic variables like the Gross domestic product, inflation, and recession help an investor to determine stock prices, stock trends, and fluctuations. One can create entry and exit points using technical analysis.
- Industry Analysis – It helps to analyze the economic significance and growth potential of an industry. Some factors like growth rate, growth potential, and contribution of a sector in an economy help an investor to make an informed decision.
- Company Analysis – Knowledge about a company’s earnings, profitability, operating efficiency, top management, capital structure, market share is essential for investors as these factors have a direct impact on the companies’ stock prices and the return made to investors. Companies with higher market share are capable of generating wealth in the form of capital for an investor.
- Valuation – It is the next step to determine the expected risks and returns from an investment. The underlying value of a share is measured through book value and the price-earnings ratio of a dividend. This intrinsic value of a stock is then compared with its market value to make an investment decision. Efforts are made to determine the future value of the investment.
- Intrinsic value = Book Value + P/E Ratio.
- Portfolio Construction – A portfolio is a combination of different securities and must be constructed in such a way that it meets the investors’ needs and objectives with the aim to deliver maximum returns with minimum risk. The main objective is to create an optimum mix of debt and equity instruments.
- Evaluation – Portfolio performance is periodically evaluated to measure and compare the var of variation in returns from different securities. Portfolio appraisal involves evaluating the portfolio concerning key dimensions of Risk and return.
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Detailed Investment analysis needs to be carried out extensively before starting investment. Performance analysis also needs to be carried out. Channelling funds into an investment enables an investor to deliver a profit successfully.
Things to be analysed
Analysis of the right investments prevents losses that might occur. Each venture is not always profitable. Disadvantages linked with investment can be nullified or reduced by proper risk analysis.
The following aspects are vital before decision making on investment :
- Risk assessment – Before investing, one should understand well the dangers of damage that may occur on the money spent. Knowing the risks helps to find solutions to minimize risk.
- Fixed Investment Period – Decision must be taken whether to invest in the short-term or long-term.
- The Parties who are Involved – Party that will invest money must be identified and known from the beginning.
The investment analysis defines as art and science about making the decision of companies and organization investment policies. It revolves around the monetary aspects of any organization and requires complete detailed studies of analytics and forecasting.The rebuttals faced by the students while writing investments analysis assignment
The following are the difficulties faced by students:
- Inadequate writing capability
- Close deadlines
- Intense Pressure of Scoring good marks
- Engagement in other tasks
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