Investment is the commitment of money or capital to purchase financial instruments or other

assets in order to gain profitable returns in the form of interest, income {dividend}, or
appreciation of the value of the instrument. [1] It is related to saving or deferring consumption.
Investment is involved in many areas of the economy, such as business management and finance
no matter for households, firms, or governments. An investment involves the choice by an
individual or an organization such as a pension fund, after some analysis or thought, to place or
lend money in a vehicle, instrument or asset, such as property, commodity, stock, bond, financial
derivatives (e.g. futures or options), or the foreign asset denominated in foreign currency, that
has certain level of risk and provides the possibility of generating returns over a period of time.[2]
Investment comes with the risk of the loss of the principal sum. The investment that has not been
thoroughly analyzed can be highly risky with respect to the investment owner because the
possibility of losing money is not within the owner's control. The difference between speculation
and investment can be subtle. It depends on the investment owner's mind whether the purpose is
for lending the resource to someone else for economic purpose or not.[3]
In the case of investment, rather than store the good produced or its money equivalent, the
investor chooses to use that good either to create a durable consumer or producer good, or to lend
the original saved good to another in exchange for either interest or a share of the profits. In the
first case, the individual creates durable consumer goods, hoping the services from the good will
make his life better. In the second, the individual becomes an entrepreneur using the resource to
produce goods and services for others in the hope of a profitable sale. The third case describes a
lender, and the fourth describes an investor in a share of the business. In each case, the consumer
obtains a durable asset or investment, and accounts for that asset by recording an equivalent
liability. As time passes, and both prices and interest rates change, the value of the asset and
liability also change.
An asset is usually purchased, or equivalently a deposit is made in a bank, in hopes of getting a
future return or interest from it. The word originates in the Latin "vestis", meaning garment, and
refers to the act of putting things (money or other claims to resources) into others' pockets.[4]. The
basic meaning of the term being an asset held to have some recurring or capital gains. It is an
asset that is expected to give returns without any work on the asset per se. The term "investment"
is used differently in economics and in finance. Economists refer to a real investment (such as a
machine or a house), while financial economists refer to a financial asset, such as money that is
put into a bank or the market, which may then be used to buy a real asset.

Contents
[hide]
• 1 In economics or macroeconomics
• 2 Investment related to business of a firm - business management
• 3 In finance
• 4 Real estate as the instrument of investment
○ 4.1 Residential real estate
○ 4.2 Commercial real estate
• 5 See also
 • 6 Notes
• 7 External links

[edit] In economics or macroeconomics

In economic theory or in macroeconomics, investment is the amount purchased per unit time of
goods which are not consumed but are to be used for future production. Examples include
railroad or factory construction. Investment in human capital includes costs of additional
schooling or on-the-job training. Inventory investment refers to the accumulation of goods
inventories; it can be positive or negative, and it can be intended or unintended. In measures of
national income and output, gross investment (represented by the variable I) is also a
component of Gross domestic product (GDP), given in the formula GDP = C + I + G + NX,
where C is consumption, G is government spending, and NX is net exports. Thus investment is
everything that remains of total expenditure after consumption, government spending, and net
exports are subtracted (i.e. I = GDP - C - G - NX).
Non-residential fixed investment (such as new factories) and residential investment (new houses)
combine with inventory investment to make up I. Net investment deducts depreciation from
gross investment. Net fixed investment is the value of the net increase in the capital stock per
year.
Fixed investment, as expenditure over a period of time ("per year"), is not capital. The time
dimension of investment makes it a flow. By contrast, capital is a stock— that is, accumulated
net investment to a point in time (such as December 31).
Investment is often modeled as a function of Income and Interest rates, given by the relation I =
f(Y, r). An increase in income encourages higher investment, whereas a higher interest rate may
discourage investment as it becomes more costly to borrow money. Even if a firm chooses to use
its own funds in an investment, the interest rate represents an opportunity cost of investing those
funds rather than lending out that amount of money for interest.[5]
[edit] Investment related to business of a firm - business
management
The investment decision (also known as capital budgeting) is one of the fundamental decisions of
business management: Managers determine the investment value of the assets that a business
enterprise has within its control or possession. These assets may be physical (such as buildings or
machinery), intangible (such as patents, software, goodwill), or financial (see below). Assets are
used to produce streams of revenue that often are associated with particular costs or outflows. All
together, the manager must determine whether the net present value of the investment to the
enterprise is positive using the marginal cost of capital that is associated with the particular area
of business.
In terms of financial assets, these are often marketable securities such as a company stock (an
equity investment) or bonds (a debt investment). At times the goal of the investment is for
producing future cash flows, while at others it may be for purposes of gaining access to more
assets by establishing control or influence over the operation of a second company (the investee).
[edit] In finance
In finance, investment is the commitment of funds by buying securities or other monetary or
paper (financial) assets in the money markets or capital markets, or in fairly liquid real assets,
such as gold or collectibles. Valuation is the method for assessing whether a potential investment
is worth its price. Returns on investments will follow the risk-return spectrum.
Types of financial investments include shares, other equity investment, and bonds (including
bonds denominated in foreign currencies). These financial assets are then expected to provide
income or positive future cash flows, and may increase or decrease in value giving the investor
capital gains or losses.
Trades in contingent claims or derivative securities do not necessarily have future positive
expected cash flows, and so are not considered assets, or strictly speaking, securities or
investments. Nevertheless, since their cash flows are closely related to (or derived from) those of
specific securities, they are often studied as or treated as investments.
Investments are often made indirectly through intermediaries, such as banks, mutual funds,
pension funds, insurance companies, collective investment schemes, and investment clubs.
Though their legal and procedural details differ, an intermediary generally makes an investment
using money from many individuals, each of whom receives a claim on the intermediary.
Within personal finance, money used to purchase shares, put in a collective investment scheme
or used to buy any asset where there is an element of capital risk is deemed an investment.
Saving within personal finance refers to money put aside, normally on a regular basis. This
distinction is important, as investment risk can cause a capital loss when an investment is sold,
unlike saving(s) where the more limited risk is cash devaluing due to inflation.
In many instances the terms saving and investment are used interchangeably, which confuses this
distinction. For example many deposit accounts are labeled as investment accounts by banks for
marketing purposes. Whether an asset is a saving(s) or an investment depends on where the
money is invested: if it is cash then it is savings, if its value can fluctuate then it is investment.
[edit] Real estate as the instrument of investment
In real estate, investment money is used to purchase property for the purpose of holding or
leasing for income and there is an element of capital risk.
[edit] Residential real estate
The most common form of real estate investment as it includes property purchased as a primary
residence. In many cases the buyer does not have the full purchase price for a property and must
engage a lender such as a bank, finance company or private lender. Different countries have their
individual normal lending levels, but usually they will fall into the range of 70-90% of the
purchase price. Against other types of real estate, residential real estate is the least risky.[citation
needed]

[edit] Commercial real estate

Commercial real estate consists of multifamily apartments, office buildings, retail space, hotels
and motels, warehouses, and other commercial properties. Due to the higher risk of commercial
real estate, loan-to-value ratios allowed by banks and other lenders are lower and often fall in the
range of 50-70%.[citation needed]
[edit] See also
InvestorWords.com
investment

investment

Hide links within definitionsShow links within definitions

Definitions (2)
1. In finance, the purchase of a financial product or other item of value with an
expectation of favorable future returns. In general terms, investment means the use
money in the hope of making more money.

2. In business, the purchase by a producer of a physical good, such as durable

equipment or inventory, in the hope of improving future business.

Read more: http://www.investorwords.com/2599/investment.html#ixzz10Xvsw6Qt

Meaning
he word "investment" can be defined in many ways according to different theories and
principles. It is a term that can be used in a number of contexts. However, the different meanings
of "investment" are more alike than dissimilar.

Generally, investment is the application of money for earning more money. Investment also
means savings or savings made through delayed consumption.

According to economics, investment is the utilization of resources in order to increase income or

production output in the future.

An amount deposited into a bank or machinery that is purchased in anticipation of earning

income in the long run are both examples of investments. Although there is a general broad
definition to the term investment, it carries slightly different meanings to different industrial
sectors.

According to economists, investment refers to any physical or tangible asset, for example, a
building or machinery and equipment.

On the other hand, finance professionals define an investment as money utilized for buying
financial assets, for example stocks, bonds, bullion, real properties, and precious items.
According to finance, the practice of investment refers to the buying of a financial product or any
valued item with an anticipation that positive returns will be received in the future.

The most important feature of financial investments is that they carry high market liquidity. The
method used for evaluating the value of a financial investment is known as valuation.

According to business theories, investment is that activity in which a manufacturer buys a

physical asset, for example, stock or production equipment, in expectation that this will help the
business to prosper in the long run.

Investment In India

India is one of the top five economies in the world in terms of market potential and
is placed above countries like France, Italy, Russia and the United Kingdom. India is
also ranked as the third biggest economy in Asia in terms of gross domestic
product. All these make investment in India a lucrative option for the investors
across the world.

The investment market in India offers lots of possibilities for the investors as the
level of purchasing power is improving over time. The investors stand to gain in
each and every areas of business in India. However the response from the
outstation investors has been lukewarm compared to other countries like China.

Investors in Europe consider the Indian investment market to be a favorable option

in spite of the persistent political turmoil in this part of the world. There are certain
factors that have been acting as deterrents for outstation investors in India like
official problems, power cuts and infrastructural inadequacies.

It is expected that India would pretty soon be counted amongst the three best
economies in the world and this suggests that there would be huge inflow of foreign
funds in the Indian investment market. The recent boom in IT sector has played a
crucial role in expanding the domain of Indian investment market.

In order to gain benefits from investment in India it is imperative that the

prospective investors do not think of any short-term profits as any financial gain
could only be accrued from long-term investment. The organizations willing to
invest in India need to undertake extensive research so as to understand the
workings of the Indian investment market.

It is highly necessary for the prospective investors to have an accurate

understanding of the complications as well as the potential of the Indian market in
order to be successful in long run.
Investment Types
A particular investor normally determines the investment types after having formulated the
investment decision, which is termed as capital budgeting in financial lexicon. With the
proliferation of financial markets there are more options for investment types.

According to the financial terminology investment means the following:

• Purchasing Securities in Money or Capital Markets
• Buying Monetary or Paper Financial Assets in Money or Capital Markets
• Investing in Liquid Assets like Gold, Real Estate and Collectibles
Investors assume that these forms of investment would furnish them with some revenue by way
of positive cash flow.

These assets can also affect the particular investor positively or negatively depending on the
alterations in their respective values.

Investments are often made through the intermediaries who use money taken from individuals to
invest. Consequently the individuals are regarded as having claims on the particular
intermediary.

It is common practice for the particular intermediaries to have separate legal procedures of their
own. Following are some intermediaries:
• Banks
• Mutual Funds
• Pension Funds
• Insurance Companies
• Collective Investment Schemes
• Investment Clubs

Investment in the domain of personal finance signifies funds employed in the purchasing of
shares, investing in collective investment plans or even purchasing an asset with an element of
capital risk. In the field of real estate, investments imply buying of property with the sole
purpose of generating income.

Investment in residential real estate could be made in the form of buying housing property, while
investments in commercial real estate is made by owning commercial property for corporate
purposes that are geared to generate some amount of revenue.

• Capital Investment
• Financial Market investment
• Stock Investment
 • Share Market Investment
• Land Investment
• Retirement Investment
• Real Estate Investment
• Gold Investment
• Portfolio Investment
• Business Investment
• Equity Investment

Essential of Investment

Essentials of investment refers to why investment, or the need for investment, is

required. The investment strategy is a plan, which is created to guide an investor to
choose the most appropriate investment portfolio that will help him achieve his
financial goals within a particular period of time.

An investment strategy usually involves a set of methods, rules, and regulations,

and is designed according to the exchange or compromise of the investor's risks
and returns.

A number of investors like to increase their earnings through high-risk investments,

whilst others prefer investing in assets with minimum risk involved. However, the
majority of investors choose an investment strategy that lies in the middle.

Investment strategies can be broadly categorized into the following types:

• Active strategies: One of the principal active strategies is market timing (an
investor is able to move into the market when it is on the low and sell the
stocks when the market is on the high), which is applied for maximizing
yields.
• Passive strategies: Frequently implemented for reducing transaction costs.

One of the most popular strategies is the buy and hold, which is basically a long
term investment plan. The idea behind this is that stock markets yield a
commendable rate of return in spite of stages of fluctuation or downfall. Indexing is
a strictly passive variable of the buy and hold strategy and, in this case, an investor
purchases a limited number of every share existing in the stock market index, for
example the Standard and Poor 500 Index, or more probably in an index fund,
which is a form of a mutual fund.

Additionally, as the market timing strategy is not applicable for small-scale

investors, it is advisable to apply the buy and hold strategy. In case of real estate
investment the retail and small-scale investors apply the buy and hold strategy,
because the holding period is normally equal to the total span of the mortgage loan.

Investment Strategy

Investment strategy is actually the plan, which is followed by an investor to make

profits and to achieve financial stability. Based on this investment strategy the
investor identifies the areas where the money can be invested safely. At the same
time the returns from that money is also of equal importance. The investment
strategy also helps the investor to reduce the risk factor from the investment
portfolio.

Now several investment options are available in the market. There are thousands of
people who are making money from these options. Again, there are also a large
number of investors who are facing losses everyday. This means that if the
investment is done in a proper manner, the profit can be made from every possible
medium otherwise the result may be the opposite.

But to make the investment successful, an investor needs to do the homework

properly. He or she needs to follow that market closely in which he or she wants to
invest. There are several sources like the financial market news, several journals,
internet and many more that can provide vital information about the financial
market. These information are very important to form a strategy. At the same time,
the financial planners can also provide assistance to form an investment strategy,
which suits the need of the investor.

Before planning a strategy for investment, one needs to be sure about the aim of
his or her investment. One needs to decide about the desired returns and more
importantly the amount of risk that he or she can bear. These factors are going to
decide the suitable medium of investment for the investor.

The investment medium may be anything, the investment portfolio of the investor
should be diversified. Investing in one single medium may increase the amount of
risk. In multi-investment, the risks related to one medium are covered through
another one.

The two basic investment choices are the stock market and the bond market. The
stock market is full of different types of shares and options. All these shares are
different from each other in many aspects like the amount of risk and the pace of
growth. Now, the investor needs to follow a certain investment strategy to invest
in this market. The investor needs to choose some specific shares in which the
money would be invested. At the same time, the investor should also buy some
options to minimize the amount of risk involved in the shares. The bond market is
not so complicated and so the strategies are very simple.

Investment Planning

The basic idea behind any form of investment planning is to maximize future
financial returns for future security. In formulating a financial plan, an individual
investor must carefully consider his or her choices before making any decision.

Investment planning involves considering many possible financial options that could
be used to secure the desired financial future. Often groups of individuals get
together for the purpose of investment planning.

Investment plans require careful scrutiny of the financial market. It is mostly the
responsibility of the particular firm to make the decision on the matter of
management of money, which could be utilized in meeting long term asset
investment plans or for gathering working capital.

An integral part of financial planning is the system a particular investor uses to

decide how much and in what ways to invest. Another important task is to ascertain
the source from where the money could be obtained.

Yet another important aspect of investment planning is analyzing the development

and performance of investments in a particular span of time. This could help the
investor by cutting down on the amount of uncertainty involved in the process.
Investment planning also helps investors in channeling their funds in the right
direction.

An important reason for investment planning is planning for retirement. Investment

calculators have proven to be a useful tool in helping people plan in advance for
their retirement.
 Investment Company

An investment company is basically in charge of helping the clients to deal in

various forms of investment like the securities market for example. The investment
companies are normally engaged in trading securities but there are other variations
of the investment company as well.

The real estate investment companies are a type of investment company which
deals in mortgage services. These companies are suitable for those investors
working on their own and are unable to commit too much time for their business
activities. Of late these real estate investment companies have been attending to
the individual needs of the investors.

The stock investment companies help their clients to deal in the stock market. The
services provided by these companies enable the clients to deal in the stocks and
derivatives of a certain company. The securities traded in the stock markets could
be listed in an exchange and traded in private too.

The mortgage investment companies deal in the provision of mortgage services to

respective clients, as and how they might require them. The mortgage investment
companies are highly sought after in the United States of America because of the
excellent quality of services they are reputed to provide. These companies also look
after the individual needs of the investors.

The offshore investment companies provide the investors with the opportunity to
invest in properties that are located in the specific country from where they are
operating. The offshore investment companies give a lot of importance on
collaterals as they play an important role in the context of reducing the level of risk
involved in the transactions.

The capital investment companies offer services to both the individual as well as
the organizational investors. Some of these companies in the United States also
serve clients from Canada. These companies provide their individual clients with
mutual funds, personal investment management services and investment funds. To
the organizational clients they provide mutual funds.

A study on the investment company list gives some idea about the booming investment industry
of the world. The investment companies are those, which hold financial securities of the other
companies.

An investment company is a trust, corporation or partnership that primarily invests the funds
pooled from the shareholders in the financial securities. An investment company may also be
defined as a firm that uses its capitals in order to invest in other companies. There are two major
types of investment companies - open-end or mutual funds and the closed-end. In case of the
closed-end investment companies, the shares, which are enlisted in the stock exchange can be
readily transferable in the open market and can be bought and sold like other shares in the
market. While an open-ended investment company is a limited investment company and the
prime objective of such companies is to manage the investment funds. In case of an open-end
investment plan, the funds get bigger over time.

There are a number of investment companies in the world that offer both the open-ended and
closed-ended investment plans. Some of the investment companies of the world are - Apollo
Investment Corp. Crown Financial Holdings Inc. Empire Financial Holding Company First
Montauk Financial Mellon Financial Corporation, The Bear Stearns Companies Inc. W.P.
Stewart & Co., Ltd.

Here is a list of investment companies of world:

• Invesco PLC (ADR)
• A.B. Watley Group Inc.
• Knobias, Inc.
• Affiliated Managers Group, Inc.
• Lehman Brothers Holdings Inc.
• Allied Capital Corporation
• MCG Capital Corporation
• Berkeley Technology, Limited (ADR)
• Merrill Lynch & Co., Inc.
• Calamos Asset Management, Inc
• Morgan Stanley
• Castle Holding Corp.
• Nasdaq Stock Market, Inc.
• Citigroup Capital XIV
• NYSE Euronext
• CME Group Inc.
• Och-Ziff Capital Management Group
• Cypress Sharpridge Investments, Inc.
LLC
• Diamond Hill Investment Group, Inc.
• Ryan Beck Holdings, Inc.
• Evercore Partners Inc.
• Sagient Research Systems, Inc.
• FBR Capital Markets Corporation
• SEI Investments Company
• First Albany Companies Inc.
• Sovereign Exploration Associates Int
• Franklin Resources, Inc. Inc
• Gamco Investors Inc. • Stifel Financial Corp.
• Goldman Sachs Group, Inc. • TD Ameritrade Holding Corp.
• Gundaker/Jordan American Holdings, • The Blackstone Group L.P.
Inc.
• Thomas Weisel Partners Group, Inc.
• Hudson Holding Corp.
• U.S. Global Investors, Inc.
• International Securities Exchange Hldgs
• United States Natural Gas Fund, LP
• Investment Technology Group
• Van der Moolen Holdings N.V. (ADR)
• JMP Group Inc.
• Vie Financial Group, Inc.
• Kirlin Holding Corp.
• Winmill & Co. Incorporated
Investment banks
Investment banks are financial groups set up to help governments and large enterprises raise
money by issuing and selling securities in the primary market. Their main objective is to assist
public and private corporations in raising capital.

These banking firms generally act as an intermediary between the issuer of securities
and the investors. Investment bankers handle the distribution of previously issued financial
securities and also maintain the market for securities that are already distributed. They are an
important source of advice on acquisitions, mergers and other types of financial transactions.
There are very few banking firms that solely offer investment banking services - most provide
additional services such as fixed income, trading of derivatives, equity securities, commodities
and foreign exchange.

With the advent of the Internet, banking services around the world have become easier. The
process of information exchange is now fast and hassle-free. Online investment banking has
made financial transactions easier than ever before, and online services such as investment plans
and secure payment are changing the nature of the banking industry.

A recent study on investment banking worldwide showed that revenue had increased to $52.8
billion in 2005, 14% higher than 2004. The US held a 51% share of the entire market in 2005,
while Europe with the Middle East and Africa generated 31% and the Asian countries generated
18% of the total market share.

To know more about investment banks, try the following links:

Investment Banks

• America Bank Investment • Canadian Bank Investment

• Top 10 Investment Bank
• Online Investment Bank
• New York Investment Bank
• Hsbc Bank Investment
• Swiss Bank Investment
• Fidelity Bank Investment
• National Bank Investment
• Royal Bank Investment
• Atlanta Bank Investment
• Investment Banks In San Francisco

Investment Brokerage
Investment brokerage refers to the services offered by the investment brokers. The principal
function of an investment broker is to match the buyers with the sellers of investments.

Usually, a broker is a person or firm, which functions as an intermediary between the purchaser
and the seller. A broker who functions as a buyer or seller plays the role of a principal party for
the transaction. The function of a broker is different from that of an agent. An agent functions on
the part of a principal.
An investment brokerage firm is a commercial entity, which functions like an investment
broker. It provides a comprehensive range of services related to investments to its clients with
the help of the investment brokers. In some instances, investment brokers are also called as
investment advisors or investment consultants.

The services offered by investment brokerage include the following:

• Stock brokerage services
• Real estate brokerage services
• Foreign exchange brokerage services
• Insurance brokerage services
• Commodity brokerage services
• Consultation or advisory services
For the provision of different types of services, the investment broker charges a fee from the
client, which is known as commission. This is usually expressed as a percentage.

The investment brokerage firms offer valuable investment tips to the investors regarding
various types of investments. With the help of investment brokerage services, the clients are
able to achieve their financial objectives quite easily. They help the investors to create a sound
investment portfolio with the combination of different types of investments. They apply different
types of investment strategies, which prove to be profitable for the investors and the investors are
able to find which should be the most suitable investment option for them. The investment
brokerage services are also helpful for retired persons regarding their retirement planning and to
increase their savings for contingency situations.

Online investment brokerage services are also offered by a number of investment brokerage
firms. Online investment proves to be a quick, convenient and cheap method of fund
management.
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There are a large number of investment instruments

available today. To make our lives easier we would classify
or group them under 4 main types of investment avenues.
We shall name and briefly describe them.
1. Financial securities: These investment instruments are freely tradable and negotiable. These
would include equity shares, preference shares, convertible debentures, non-convertible
debentures, public sector bonds, savings certificates, gilt-edged securities and money market
securities.
2. Non-securitized financial securities: These investment instruments are not tradable,
transferable nor negotiable. And would include bank deposits, post office deposits, company
fixed deposits, provident fund schemes, national savings schemes and life insurance.
3. Mutual fund schemes: If an investor does not directly want to invest in the markets, he/she
could buy units/shares in a mutual fund scheme. These schemes are mainly growth (or equity)
oriented, income (or debt) oriented or balanced (i.e. both growth and debt) schemes.
4. Real assets: Real assets are physical investments, which would include real estate, gold &
silver, precious stones, rare coins & stamps and art objects.
Before choosing the avenue for investment the investor would probably want to evaluate and
compare them. This would also help him in creating a well diversified portfolio, which is both
maintainable and manageable.
To study the investment environment would be of
importance to the investor, as it would also encompass the
demand supply match and mismatch.

Let us visualize the world and its economy. There are many countries with their many economies
in this environment. We see the interaction between countries at different stages in their
development. We see the many markets to enable this interaction between the various countries.
Each of these markets has its regulator, the trading platform and its system, its agents (or
brokers), and the participants. Here it is a question of demand and supply of various
commodities, products & services and trading instruments. And the analysis would encompass
the demand-supply match/mismatch.
In this global environment, we have India with its economy and its own many markets.
Among these markets we have the securities market, with its regulator (SEBI), the trading
platform and its systems (stock exchanges), its agents (brokers) and its many participants
(including corporate, financial institutions both domestic and foreign, mutual funds, insurance
companies, banks and individual investors). Here again it is a question of demand and supply of
various commodities, products & services and trading instruments. And the analysis would
encompass the demand-supply match and mismatch.
It would be advisable to note at this stage, that due to the liberalization process undertaken by
India over the last 18 years, we are today in an environment where events that take place in other
parts of the world have a direct or indirect effect on our economy. This would further effect the
specific market and finally would have an effect on the equity market.
Let us visualize a scenario of an industrial slowdown in the U.S. Amongst other things, this
would have a direct bearing (i.e. a reduction) on the demand of steel. To protect its own domestic
steel industry, the U.S. government would temporarily introduce trade barriers on steel imports.
This in turn would cause a reduced export of steel from India to the U.S., causing a temporary
over supply of steel in the domestic market. The steel manufacturers would have to tackle the
higher levels of inventory and its associated costs. In the domestic steel market, even if the
demand were constant, the excess supply would cause a reduction in the price realization per
marketable ton of steel. This in turn would directly effect the incomes and profit margins of the
steel manufacturers. Such a situation would temporarily cause a drop in the share prices of steel
stocks in the equity market.
This example is to describe to you how logical the sequence of events is and what the end result
would be. However, this sequence does take a long duration of time to unfold, sometimes may
even take years.