In the finance term, investment means putting money into something and expecting profit. This process takes a detail analysis through economical security and the security of return in a period of time. In other hand, putting money into something and expecting profit but without any analysis is a gambling or speculation. To avoid speculation, an investment must be backed with sufficient analysis and other assets like financial assets.
The investment decision or capital budgeting is one of the basic and important decisions of business management. A manager must able to determine the value of investment from the assets that the business organization owns or controls. Assets are used to make profits or revenue. These assets can be physical assets like building or machinery, intangible assets like patents, or financial assets.
The financial assets can be a marketable securities or company stock. The purpose of investment is to make cash flow in the future, or collecting more assets. Business organization can raise funds from investors in the form of capital structure including debts and equities. Later on, the business organization can reinvest the capital structure into other investment schemes which provides a long term benefits. If a business organization decided to use their own funds, the interest rate represent an opportunity cost of investing the funds.
Behavioral Finance is the psychological studies on how the managers or investors affect the financial decisions and markets. These studies have grown to become central to finance. It includes the empirical studies which show the important deviations from classical theories, the models of the affect of psychology on trading and prices. It also studies about forecasting and experimental asset market.