Risk and Uncertainty Involved in Investments
- Created by: tanja soulsby
- Created on: 31-05-17 11:52
View mindmap
- Risk and Uncertainty Involved in Investments
- All investment appraisal methods based on predictions about how much income can be generated from investments
- Difficult to accurately predict what is going to happen in the future - businesses can't always rely on predictions
- Market environments are always uncertain
- Circumstances might change unexpectedly, having a negative impact on the business
- Exchange rates could alter
- Sales might decrease
- Customers' tastes might change
- Competitors may become stronger
- Costs of raw materials could increase
- Any change in the circumstances that businesses based their investment predictions on can mean their predictions are no longer valid
- Every firm has a difficult attitude to risk
- Some firms are happy to take big risks that might lead to big financial rewards
- Other firms prefer to play it safe and go for less risky investments
- It's often a good idea to have a set of investment criteria
- Conditions that need to be met for an investment to be approved
- Can include anything
- Expected return
- Job creation
- Environmental targets
- Etc. ?????????????
- All investment appraisal methods based on predictions about how much income can be generated from investments
Similar Business Studies resources:
Teacher recommended
Comments
No comments have yet been made