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Finance (Investment) is the lifeblood of an economy. With out investment it is very hard to attain desired growth level better say the concept of attaining growth level is impossible. In order to ensure that investment is analyzed properly and has lead to effective investment decisions the focus of this proposal is on the techniques of investment analysis that can lead to sensible top-level investment decisions and managing risk involved thereby. Investment analysis and risk management are very closely related. A very common saying is higher the risk higher the profit. So risk assessment is to be incorporated while going through decision-making process.
Investment analysis is aimed to maximize the rate of return an investment earns or can be termed as investment yield. But the process of analyzing involves the assessment of risk and then its management. Risk management is the process of measuring or assessing risk and then developing strategies to manage the risk. Presently various techniques are in use some of them are earning based valuation, capital asset pricing model, portfolio investments. In practice the process can be very difficult, and balancing between risks and high probability of occurrence but lower loss vs. a risk with high loss but lower probability of occurrence can often be mishandled. Risk management also faces a difficulty in allocating resources properly. This is the idea of opportunity cost. Resources spent on risk management could be instead spent on more profitable activities. Again, ideal risk management spends the least amount of resources in the process while reducing the effects of risks as much as possible
Pakistan’s saving performance and its overall economic and financial performance appears to be incongruous. What are the reasons for such poor performance of savings and investments in Pakistan? Since the strength is dependent on the investment made in the country so for that matter Pakistan is seeking investment. Government is also interested in increasing the investment from the public disinvestment process leading to