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Business Studies · 2023 · 4 marks
CBSE 2023 · Region 5 · Set 3 · Q28
What is meant by ‘Investment Decision’? State how ‘Long
term Investment Decision’ and ‘Short Term Investment Decision’
affect the business.
Marking-scheme solution
The investment decision refers to how the firm’s funds are
invested in different assets to earn the highest possible return for
their investors.
Investment decision can be long-term or short-term.
(a)
A long-term investment decision is very crucial for any business
since it affects the earning capacity over the long run. It affects the
size of assets, the profitability and competitiveness. Moreover, these
decisions normally involve huge amounts of investment and are
irreversible except at a huge cost.
(b)
Short term investment decision affects the day to day working of
a business. It affects the liquidity as well as profitability of a
business. Efficient cash management, inventory management and
receivables management are necessary for sound working capital
management.
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CBSE Class 12 Business Studies past-paper question from the 2023board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.