Investment is a term with several closely related meanings
in finance and economics.
In theoretical economics,
investment means the production of capital goods - goods which
are not consumed but instead used in future production. Examples
include building a railroad, or a factory, clearing land,
or putting oneself through college.
In finance, investment
means buying assets, for example equity investment or real
estate investment. These investments may then provide a future
income and increase in value.
Financial economics is the branch of economics concerned
with the workings of financial markets, such as the stock
market, and the financing of companies.
It attempts to answer questions such as:
-How are the prices of financial assets, such as shares and
-What are the effects of a company choosing different methods
of financing its operations, such as issuing shares or borrowing?
-What portfolio of assets should an investor hold in order
to best meet her objectives?