4 Responses Aug 27

Naren Work:

Investment and Financing Decisions

Financial managers provide a conceptual and analytical framework for financial decision-making. Investment decisions are financial decisions that are concerned with how an organization invests funds in different assets. They can be long-term assets, which involve significant investment and produce returns over some time in the future or short term assets, which can be converted into cash within a given financial year (Massey, n.d.). The inventory investment decision is an example of an investment decision that financial managers must make. The short-run adjustment of stocks often influences inventory investment to a correctly determined long-term period. Financial managers evaluate various potential investment opportunities and select the best options. Moreover, they must arrange a firm’s inventory policy and ensure the firm’s overall profitability. Financing decisions, on the other hand, are financial decisions concerned with funds that need to be raised from various long term sources, including preference shares, equity shares, debentures as well as bank loans. An example of a financing decision is selling debt in the public market. Financial managers play a critical role in seeking a balance between debt and equity through the sale of ownership in the firm.

Financial Markets

            The stock market is one of the essential types of financial markets. The stock market is where exchange activities such as issuance and trading of shares of publicly listed companies take place. It is a stock exchange market where investors buy and sell shares of stock. Investors who anticipate the growth of the economy will often invest in stocks since a robust economy enables firms to improve their earnings capability. Investing in the stock market is usually regarded as the most effective in achieving returns that overcome inflation over time. Stock market investment also leads to average returns that surpass those of other investments. However, the decision to invest in stock markets requires better insight and a comprehensive understanding of the global perspective of human nature (Wamae, 2013). In addition, it also requires sharp financial skills and the ability to the best out of investments.

References

Massey, N. Types of Financial Decisions in Financial Management. Retrieved 27 August 2020, from https://www.economicsdiscussion.net/financial-management/types-of-financial-decisions-in-financial-management/31652

Wamae, J. N. (2013). Behavioural factors influencing investment decision in stock market: A survey of investment banks in Kenya. International Journal of Social Sciences and Entrepreneurship, 1(6), 68-83.

Sri Harsha Work:

Week-1 Discussion

In the present emerging competitive market to accomplish their competitive marketplace it is necessary for the organizations to take required decisions on their finance. These decisions are usually made by financial managers who play a key role in managing the organizational profit rate (Gitman & Zutter, 2015). In relation to this, they make investment decisions to earn the highest possible return for their investors. One of the best examples of investment decisions is capital budgeting decisions. Organizational assets as well as resources mainly use this kind of decision. By this, a firm can easily pick its investment to gain a huge amount of conceivable returns. Likely these decisions are extensively related to a careful selection of assets in which the funds will be invested by the organization. By this managers can easily process funds within the procuring that are fixed assets as well as current assets. Some of the major factors that influence investment decisions include profits, investment criteria, and cash flow of venture (Drobetz, Janzen, & Meier, 2018). Secondly, the financing decisions are identically considered to most essential because in consideration of this the managers make wise decisions related to business acquire funds. As an example, the market estimations of fan organizations are shared for expanding and developing the organizational investors' wealth. This is identically related to competition of various securities within the capital structure of an organization. Some of the major factors affecting financing decisions include cost, risk, cash flow position, control, and condition of the market. 

The stock market is one of the best examples of investment and financing decisions. Because the stock market trades are shares of ownership related to public organizations. In relation to this, investors make money with stock while performing well within the market (Amidu & Haruna, 2018). Alternatively, the bond market extensively provides a large number of opportunities for organizations as well as the government in order to secure financial investments. By this the financial markets trade within each and every organization gain securities along with smooth operations of capitalist society. 

References

Amidu, M., & Haruna, I. (2018). The role of financial markets in promoting sustainability - a review and research framework. ResearchGate , 01-05.

Drobetz, W., Janzen, M., & Meier, I. (2018). Investment and financing decisions of private and public firms. Journal of Business Finance and Accounting , 01-10.

Gitman, L. J., & Zutter, C. J. (2015). Principles of Managerial Finance: Brief, Global Edition. Pearson Education Limited.