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Objectives of Investment

Objectives
Risk Return Liquidity Hedge Safety

Risk
Risk of holding securities is related with the probability of actual return becoming less than the expected return. Investments risk is just as important as measuring its expected rate of return because minimizing risk and maximizing the rate of return are interrelated objectives in the investment.

Returns
Investors always expect a good rate of return from their investment. Return = End period value-Beginning period value + Dividend Beginning period value

Liquidity
The liquidity depends upon the marketing and trading facility. If a portion of the investment could be converted into cash without much loss of time, it would help the investor meet the emergencies.

Hedge
The return rate should be higher than the rate of inflation, otherwise the investor will have loss in real terms. Growth stocks would appreciate in their values overtime and provide a protection against inflation.

Safety
From safety point of view investments can be ranked as follows: Bank deposits Government bonds UTI units Non-Convertible debentures Convertible debentures Equity shares Non- banking financial institution

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