Determinants of Short-Term Investment Decision-Making | Semantic Scholar (2024)

FAQs

What do short term investment decisions affect? ›

Short term investment decisions are also called working capital decisions. These are concerned with the decisions about the inventories, debtors, bills receivable and level of cash etc. It affects the day to day working of the business.

Five important factors identified as accounting- information, personal-financial-needs, subjective/personal, advocate recommendation, and neutral information. H4: Accounting-information is the main factor in influencing the investment decision making.

As a result, four elements influencing: 1) personality traits, 2) behavioral factors, 3) company-related factors, and 4) exogenous factors have a positive impact on the stock investment decisions of individual investors.

Past scholars have identified that investors are captivated by equity investment due to “long-term capital growth, dividends, liquidity, shareholding in the company, and a hedge against inflationary erosion of purchasing power” (e.g. Jain et al., 2023).

Short term investment decisions are the decisions related with the bills receivables, inventories, levels of cash and debtors etc. These decisions are also known as working capital decisions.

Question: What are the four main determinants of investment? A. Expectations of future profitability, interest rates, disposable income and cash flow.

financial factors such as accounting information of the concern, social factors such as recommendation of friends, family and financial advisors and personal factors such as need to minimize the risk, diversify the funds and so on.

Additionally, making an investment decision requires taking into account a number of important factors, including your personal financial objectives, risk tolerance, and budgeting abilities. It's critical to make the right choices today because they could have a big impact on your financial future.

In other words, investment refers to the purchase of assets to generate income or undergo appreciation in the future. Investment by producers to buy capital assets such as machinery and tools depends upon two factors, which are rate of profit and and rate of interest.

What are the three factors that investors must consider when making investments? ›

The options for investing your savings are always increasing but they can all still be categorized according to three fundamental characteristics: safety, income, and growth. The first task of any successful individual investor is to find the correct balance among these three worthy goals.

a) Short term high priority objectives: Investors have a high priority towards achieving certain objectives in a short time. For example, a young couple will give high priority to buy a house.

Short‑term decisions focus on how to make the best use of resources in the short‑term. The relevant costing approach is therefore essential if a business is to maximise profits. In the long‑term, however, it should be remembered that a business must cover all of its costs, including its fixed costs.

1. Limited Growth: Compared to long-term investments, short-term options may not provide the same level of significant wealth accumulation through compound growth. 2. Greater Effort Required: Constant monitoring, research, and active management may be needed to identify lucrative short-term investment opportunities.

Short-term investing offers flexibility to the investor as they do not need to wait for the security to mature in order to get cash. On the other hand, long-term investments can be liquidated by selling in the secondary market, but the investor earns lower profits.

One of the main drawbacks is that it can increase your financial risk and cost of capital. Short-term financing usually has higher interest rates and fees than long-term financing, and it exposes you to the risk of refinancing or rollover.