1 Investment operation is one which upon through analysis promises safety of principal and an adequate return. Explain the investment process and write down the common errors in investment management
Answer:- Explanation of investment process
1. Setting investment policy
This initial step determines the investor’s objectives and the investible amount. Since there is a definite relationship between risk and return, the objectives should be stated in terms of both risk and return.
This step concludes with the asset allocation decision, which is identification of the potential categories of financial assets for consideration in the portfolio that the investor is going to construct. Asset allocation involves dividing an investment portfolio among different asset categories, such as stocks, bonds and cash.
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