Question

With the aid of a diagram kindly explain the investment processes

Answer 1

Investment Management Process:

Step # 1. Investment Policy:

The first stage determines and involves personal financial affairs and objectives before making investments. It may also be called preparation of the investment policy stage.

Step # 2. Investment Analysis:

The next step is to analyse the securities available for investment. He must make a comparative analysis of the type of industry, kind of security and fixed vs. variable securities.

Step # 3. Valuation of Securities:

The third step is perhaps the most important consideration of the valuation of investments. Investment value, in general, is taken to be the present worth to the owners of future benefits from investments. The investor has to bear in mind the value of these investments.

Step # 4. Portfolio Construction:

While evaluating securities, the investor should realize that investments are made under conditions of uncertainty.

Step # 5. Get Profit:

After considering the above steps, the last step is to get profit for the management.