Investment Analysis of Commercial Banks in Nepal
CHAPTER-I
INTRODUCTION
1.1 General Background of the Study
Investment means to sacrifice current consumption for future consumption whose main objectives is to increase future wealth. The sacrifice of current consumption takes place at present with certainty and the investor expects desired level of wealth at the end of his investment horizon. The general principle is that the investment can be retired when cash is needed. In other words, it is a commitment of money and other resources that are expected to generate additional money and resources in the future. Such a commitment takes place in the present and is certain to occur but the reward comes in the future and always remains uncertain. Therefore, every investment entails some degree of risk. The decision to invest now is a most crucial decision as the future level of wealth is not certain. So we can say that time and risk is the two conflicting attributes involved in the investment decision.
According to Donald E. Fisher and Ronald J. Jordan, (1982) “An investment is a commitment of funds made in the expectation of some positive rate of return. If an investment is properly undertaken, the return will be commensurate with the risk investor assumes”.
Also according to F. Amling, (1986) “Investment may be defined as the purchase by an individual or institutional investor of financial or real asset that produces a return proportional to the risk assured over future investment”.
Investment, in its broadest sense means, the sacrifice of current currencies and resources for the sake of future currencies and resources. An investment is one of the decisions of finance function that involves the decision of capital to establish commercial or industrial venture. In other words, it involves commitment of funds into long-term assets that would yield benefits in coming future period. Two aspects of the investment decisions are: i. The evaluation of the prospective profitability of the investment. ii.
INTRODUCTION
1.1 General Background of the Study
Investment means to sacrifice current consumption for future consumption whose main objectives is to increase future wealth. The sacrifice of current consumption takes place at present with certainty and the investor expects desired level of wealth at the end of his investment horizon. The general principle is that the investment can be retired when cash is needed. In other words, it is a commitment of money and other resources that are expected to generate additional money and resources in the future. Such a commitment takes place in the present and is certain to occur but the reward comes in the future and always remains uncertain. Therefore, every investment entails some degree of risk. The decision to invest now is a most crucial decision as the future level of wealth is not certain. So we can say that time and risk is the two conflicting attributes involved in the investment decision.
According to Donald E. Fisher and Ronald J. Jordan, (1982) “An investment is a commitment of funds made in the expectation of some positive rate of return. If an investment is properly undertaken, the return will be commensurate with the risk investor assumes”.
Also according to F. Amling, (1986) “Investment may be defined as the purchase by an individual or institutional investor of financial or real asset that produces a return proportional to the risk assured over future investment”.
Investment, in its broadest sense means, the sacrifice of current currencies and resources for the sake of future currencies and resources. An investment is one of the decisions of finance function that involves the decision of capital to establish commercial or industrial venture. In other words, it involves commitment of funds into long-term assets that would yield benefits in coming future period. Two aspects of the investment decisions are: i. The evaluation of the prospective profitability of the investment. ii.