Abstract
Decision making for portfolio selection is based on financial theory of modern portfolio and capital asset pricing model that have shaped way in which academics and practitioners analyze investment performance. Most of investors act rationally and consider all available information in the decision making process for efficiency reflecting all available information for security prices. This study aimed to examine the relationship between equity investment market environment and its portfolio selection decision-making in Arusha. This study employed descriptive and correlation research design. Purposive sampling method was applied to select 48 participants. A questionnaire was administered to collect data. Findings revealed that there was very high chance of the investors to make income out of their investments. Majority of respondents reported that market equity investment was very adequate to guarantee income from investment (mean = 3.63), predict investment income for all the periods of investment (mean = 3.25), short term investment that was within 5 years (mean = 3.75), access to equity investment information (mean = 4), making proper decision on equity investment information (mean = 3.29) and was with adequate managerial skills (mean = 3.13). Results show that high return on investment (mean = 4.25) was extremely adequate for equity investment portfolio selection, diversification (mean = 3.33) and imitation and following (mean = 3.88) were very adequate for equity investment portfolio selection, investment flexibility (mean = 3.04) and investment status and prestige (mean = 3.13) were adequate for equity investment portfolio selection. There was significant relationship between market equtiy investment environment and diversified investment portfolio selection decision. This study may serve as an eye opener to investors and mangers of companies to plan for business projects and equity investments in Arusha. There is a need to provide investors with information flow from the Bank of Tanzania and other financial institutions on investments.
Highlights
Equity investment generally refers to the business and holding of shares of stock on a stock market by individuals and companies in anticipation of income from dividends and capital to gain a rate value of the stock rises
Findings show that majority (75%) of the equity investors sampled in Arusha have met their performance goals that was ranged between 4% and 6%, 25% of them achieved their goals put that was set at less than 2%
Findings indicate that majority of respondents reported that investment market environment was very adequate to guarantee income from investment, predict investment income during all the periods of businesses, for short term investment within 5 years, access to equity investment information, making proper decision on equity investment information and adequate managerial skills
Summary
Equity investment generally refers to the business and holding of shares of stock on a stock market by individuals and companies in anticipation of income from dividends and capital to gain a rate value of the stock rises. Equity is viewed as private funds earned or reputation for generating returns above those of other markets. Financing equity through capital markets plays a crucial role in the economy of countries. Equity capita ahs a continuing claim on corporate earnings and can be used to finance projects with uncertain and long-term returns [2]. Companies need equity to invest and grow and to generate the returns needed to service debts of other forms of capital. The association indicated that equity was the bedrock of economic growth
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