Investment objectives, Financial Management

Assignment Help:

Investment Objectives:

Any investment should always start with identifying its objective. Thus, the first step in the pension fund investment management system is defining the investment objectives. Pension funds are invariably long-term investments. The investment horizon in these funds is typically 25-35 years. Thus, the objective of the fund manager should be of long-term appreciation. However, having said that, the amount of safety the fund manager has to practice cannot be stressed enough. The consideration of risk and its constraints are important because it has a direct impact on the returns. As the fund's main focus is on the returns on the investments, it is very important to decide before hand what it aims to achieve by investing. Investment objectives categorize the area or a set of portfolios, that would indicate a successful investment program. Though broad statements of investment objectives are generally included in the mission statement, a list of quantifiable investment strategies for a specific period of time has to be covered in the investment objective. The plan sponsor may set the investment objective at various levels of the plan within its investment program. An efficiency investment objective can be viewed in two ways - incurring the lowest cost for performing the various functions and reducing the economic cost of the overall organization through surpluses generated in these funds.

 


Related Discussions:- Investment objectives

measuring yield spreads, A yield spread between any two bond issues ...

A yield spread between any two bond issues can be easily computed when the maturity date for both these issues is same. The yield spread between these two bond

Define advantages and the disadvantages of a new stock issue, What are the ...

What are the advantages and the disadvantages of a new stock issue? A new stock issue increases funds and reduces the riskiness of the firm. It as well tends to send a negative

Dual aspect concept - accounting principle, Dual Aspect Concept - Accountin...

Dual Aspect Concept - Accounting Principle This is, no doubt, the basic concept in accounting.  Under this concept, each transaction has got a two-fold aspect: (i) yielding

Floating-rate securities that have adjustable quoted margin, Floaters ...

Floaters that can be classified under this head are: 1. Stepped Spread Floaters 2.  Extendible Reset Bonds

Calculate most profitable investment, TC  Shipping Ltd has decided to purch...

TC  Shipping Ltd has decided to purchase a machine to augment the company's installed capacity to meet the growing demand for its products. There are three machines under considera

Illustration of total return on investment, Illustration  An inve...

Illustration  An investor with a 1-year investment horizon purchases a 20-year 5% corporate bond. The prevailing price of the bond is Rs.82.3488 for a yield of 6.2%

What are the types of major types of finance companies, What are the types ...

What are the types of major types of finance companies? There are three main types of finance companies: a. Sales finance institutions which make loans to customers of a cer

Selection of a project in financial management, Q. Selection of a project i...

Q. Selection of a project in Financial Management ? The selection of a project is typically made on the following line: (i) In general a project becomes acceptable if it has

Explain about invoice discounting, Q. Explain about Invoice discounting? ...

Q. Explain about Invoice discounting? Invoice discounting is a technique which is able to be used to raise finance against receivables. Invoice discounting works as follows:

Valuing an option-free bond, To value an option-free bond, we must de...

To value an option-free bond, we must determine the on-the-run yield curve for the particular issuer whose bond we have to value. This on-the-run yield curve used

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd