Features of Investment Decisions

  • Investment Decisions Are Dynamic and Long-term in Nature.
Investments are meant for the long term and they have a future probability of profits or losses. Every company hopes that their decisions bring the most amount of profits.
  • Investment Decisions Are Irreversible.
Once these decisions are taken, the companies stick to them for a long time. Therefore, it is important that managers make the best decisions on behalf of the company.
  • Investment Decisions Involve High Risk.
There is, usually, a high risk associated with the investment functions. As the decisions are either estimation or interpretation, there is hardly any evidence that the decisions would be successful in the long run.
  • Investment Decisions Requires Huge Funds.
  • Investment Decisions Impact the Cost Structure.
As the companies commit to all expenses, including rent, insurance, etc., they must take all costs into account for a perfect investment decision.
  • Investment Decisions Require Long-term Commitment.
The funds in case of investment are committed for a long time which entails financial risk and lets the company act at its best while making the decisions.
  • Investment Decisions Have to Deal with Uncertainty.
Investment decisions are uncertain, as they are made for future events. It is hardly predictable to interpret the future and hence finance functions do not assure companies of success in the long run.
  • Investment Decisions Are Non-flexible.
Finance functions are not quite flexible in nature and once a company commits funds, they hardly have control over the funds. This makes the investment rigid and unavailable till the maturity of the invested fund.


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