Theories-of-Investment.pptx - Theories of Investment www.mzafinance.net 1 Concept of Investment In an economic sense it is the purchase of goods that

Theories-of-Investment.pptx - Theories of Investment...

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Theories of Investment 10/24/2019 1
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In an economic sense, it is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, it is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price. It involves employment of resources with the aim of achieving income or growth in values. 10/24/2019 2 Concept of Investment
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Autonomous Investment The investment which does not change with the changes in income level. According to Keynes, in short-run changes in income level will not affect investment but in long run investment affected by changing income. It depends more on population growth and technical progress than on the level of income. Most of the investments undertaken by government is of the autonomous nature. 10/24/2019 3 Types of Investment
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Induced Investment It is affected by the changes in the level of income. The greater the level of income, the larger will be the consumption of the community. In order to produce more consumer goods, more investment has to be made in capital goods. Keynes regarded rate of interest as a factor determining induced investment but the empirical evidence gathered so far suggests that induced investment depends more on income than on the rate of interest.
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  • Fall '17
  • Dr. Minhaz Uddin Ahmed
  • Investment Theories

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