Financial Investment Opportunities o Kim Tuy n – Sally – F04-193
A report on
Investment and Taxation Decisions
Prepared for:
Ms Joey Lai (Lecturer)
Unit 39: Financial Investment Opportunities
Banking Academy, Hanoi
BTEC HND in Business (Finance)
Prepared by: o Kim Tuy n – Sally – Class F04A
Registration No.: ITP F04-193
Submission Date: 21 November, 2012
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Financial Investment Opportunities o Kim Tuy n – Sally – F04-193
TABLE OF CONTENTS
INTRODUCTION ............................................................................................................. 3
Part 1. Range of investment available to individuals .................................................... 3
1.1 Assessment of the attitude of individuals to risk when
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In case investor already has been investing, Investor‟s current financial statement needs to be clarified.
Demographic data effect directly to investment behaviour especially risk tolerance of investors. Those elements may encourage individual to invest their money or keep money by their side (take risk or not); or if they can invest, amount of investing money (level of risk they can accept) is also defined by demographic data.
The tool used for analysing an individual‟s background is Questionnaire.
Questionnaire helps researchers reach lots of people. It does not cost much time and money. It is easy to be filled in by using multiple choices. Result of statistic then is calculated fast and precise. Sample questions are provided in Appendix.
Step 2. Assessing Risk Tolerance
On the basis of those elements above, risk attitudes of a person will be very different from others. The table below shows findings of researchers about risk tolerance based on several factors.
Factors
Researchers
Assumptions
Gender
Bruce and Johnson women take less investment risk
(1994)
Jianakoplos
and a far lower percentage of women than men are willing to
Barnesek (1998)
Age
Lewellen
(1977)
et
take any financial risk at all al. young people are less risk averse then elder people in the same task
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Financial Investment Opportunities o Kim Tuy n – Sally – F04-193
Marital
Grable (1997, p.14)
status
single individuals have
Risk for most people is an accepted part of everyday life e.g. catching a bus or walking to the shop etc... will carry some element of risk. Risk is associated with our health, safety, security, well being, employment, education, daily activities, using resources and equipment and community participation. Some adults such as those who are disabled or who are older are usually discouraged from taking risks with their budgeting, planning, employment and their daily living skills usually because people fear for their limitations or that they might hurt themselves or others. Everyone has the right to take risks and make
Anybody who takes a full role in society takes risks: crossing the road, using a bus, driving a car, and talking to people they do not know. Risk may be physical (injury and accident), emotional (humiliation, sense of failure), or mental (stress).
Most of these theories are not mutually exclusive, and there is no reason to expect that only one cause predominates. All of these theories merely push back the question--why do people differ in their attitudes toward risk or their abilities to run a business or in the constraints
For many people risk is an accepted part of everyday life. Every day activities such as catching the bus, travelling on holiday, playing football, setting up home and starting a family all carry some element of risk.
* There are three (3) schools of thought regarding risk. The first considers the positive and negative aspects of risk, but sees them as separate. The second group believes that there are benefits from treating threats and opportunities together, while the third school does not label uncertainties, but addresses uncertainty as part of “doing the job.” Argue the value of having a risk strategy despite the cost associated with it. Include an example to support
Risks can be personal or business related. Many risks occur on a daily basis and you must overcome them to get a reward. Risks include; -
One factor that influences a person’s choice to take a risk would be their emotions. People tend to make decisions based on their emotions over logical thought. Alan Sanfey found through his ultimatum game, that despite the knowledge that if people rejected the sum of money offered they would get nothing, people rejected the money when they felt the split was unfair. This rejection is thought to have occurred because people were angry that the money was not split fairly (Goldstein, 2015, p.386). Personally, I consistently lost spins, despite that I was more likely to win. I became a bit annoyed, and since it was not real money, I decided to just keep spinning the well to see what would happen. Another factor that could influence a person’s likeliness to engage in risky behavior is his or her observations. Even when a person knows everything about a situation, he or she may make a decision based on how he or she perceives the situation. This may occur because of the framing effect, as a different way of wording a situation may cause a person to alter their decision. Veronica Denes-Raj and Seymour Epstein had subjects try to pick red jellybeans out of a bowl filled with white beans. People tended to choose the bowl that had more red beans, despite knowing that there was a lower probability of picking a red bean. The increased number of red beans increased their confidence in their ability to pick a red bean, even if the probability was lower (Goldstein, 2015,
In the case study, Fastsave is a retail chain store company that was doing quite well, and had more than enough financial resources to make investments. In other words, they are able and they have the capacity to take risks with no significant danger of losses. The real risk here was whether it would be worth it for them in terms of time and effort. The attitude to risk is also based on individuals who personalities vary. In the case study, individuals who are more reserve tend to be more cautious as they are realistic while the others who are more risky or outgoing tend to be more straightforward as they maintained an optimist
The word “risk” means the possibility of suffering a harmful event. Risk taking can bring either positive or negative result because anytime we take risks in life, there is a possibility of loss which can cause tension. There are a lot of people who take big risks and appear not to be affected by them. But, many of us feel very uneasy when faced with risk-taking; we may become worried about the risk. Although some people are content in life by just playing it safe and not courting any
as well as the mechanics of commercial real estate leasing. The asset types we will consider
The subjective risk is uncertainty based on one’s mental condition or state of mind. Accordingly, the objective risk is measurable and statistical; the subjective risk is personal and not easily measured.
iskfreeassets$, with households as their counterpart for this financial position. Banks also hold $Facevalue$ government bonds. Each government bond has a face value equal to one, payable at the end of the second period. The government, however, may default on its debt, so the payoff may be lower than one. Let $govtpayoff(Y) leq 1$ be the actual payoff of one government bond, where $Y$ is the aggregate output---the payoff, $govtpayoff(Y)$, will be determined below. One key feature of the mechanism that we describe is that banks ' loans are distorted by the overhang of the existing bank liabilities. To model this feature, we assume that, initially, each bank has financial
b) A researcher will be unable to observe differences in risk attitudes. If workers who tend to be
Alternative investments have played an increasingly significant role in Blackstone group portfolios. These alternative investments add to the core competencies of capabilities with in the company that provide a competitive advantage over the rivalry companies. Blackstone group is mostly immune to trend towards lower fees. “While there is pressure on fees in the industry, we do not expect Blackstone to be impacted,” Blackstone reports. “While competitors are adjusting pricing, the current level seems more in line with the rates Blackstone already charges its limited partners.”
The above graph is used to represent a high and a low risk investment. As it describes, a high-risk investment may at first seem to be a very bad investment, but will become a high return investment after a short time. However, for a low risk investment, there will also be positive returns, but not so significant, as those of a high-risk investment.