EXPECTATIONS

Since investment is a risky activity for an investor to take, any indication of economic downturn, like
war, rising of the commodity prices reduces the expected benefit of an investment.

However, with the involvement of expectations about the future will likely help the investors to
influence a firm's investment appraisal (pagassess sa investment in terms sa risk and returns and as
well as for eventual decision-making especially sa firms who plans to invest through investments.

Now, again, Expectations that we have here is slightly different from the general expectation that
we know of kay of course gafocus ra ta sa point of virw sa usa ka investor.

In here sa usa ka investor, were influenced either objectively or subjectively.

-Objectively- were they rely on the data about phase of business cycle, technological
changes,population growth & etc.
- Subjective- refers to degree of confidence among them (optimistic & pessimistic) It rather
questions, How confident are the investors to invest despite sa economic conditions because of the
uncertainties.

Kay of course, if investor ka you have to make sure yhat the expected rate of return exceeds sa cost
nga naincu or it could nga firms invest because they might be confident nga macover pud nila ang
future costs mao murisk sila.

Pero let me ask you unsay gamit ni expectations as an investment demand? Whats the purpose
ngano part siya ani?

The purpose jud aning expectation as an investment demand is to formulate an action, kay dili ra
kaayo ang future imo iexpect in the future but as well as the action and that action is to allow the
investor to determine what type and amount of investment spending they are going to make
based on a certain condition sa economy,-whether booming or rescession ang state in order for
them to arrive at a certain level of profit sa investment.

For these statements nga naa diri it pertains ni expectations, how can it affect the invest ment
demand and nagpertain pud ni siya ang expectation kuno is the main cause sa shifting or changing
from thid position to diri sa invesment demand pero in what way? __ so basahon.
As expectations change in a way that increases the expected return from investment, the
investment demand curve shifts to the right.

Similarly, expectations of reduced profitability shift the investment demand curve shifts to the left.
pero unsau pasabot ani, lets try to see the illustration.
So lets try to observe from this illustration.
Again. We are given with interest rates pertaining to rate of return in the y acis and in the axis sad
kay ang planned investment spending, and within the graph it shows the 3 lines of expectations we
have intial, , best and worst, kay of course, investment is risky so we have to consider on all sides.
Lets say for example, a firms wants to invest

Kay again, expectations doesnt mean you only anticipate the future conditions but as well as the
action that you will take if ever that situation will happen. So same idea gihapon where if investor
ka, maghunahuna gani ka nga hala what if maalkansi ko kay tungod gamay akong madawat kay
nidako ang government taxes? So of course ang imohang action bga iformulate kay kining duha.
Points*. Magformulate ka unsa man type of invest nga dili risky? Ichange kaya nako no? Or in
terms sa amount, what if gamay ra ako iinvest or basin unya nalang ko muinvest? Mao na siya.
Kay ang point ani gud it is to allow the investors to determine what type of investment spending &
amount of investment spending are they going to make based on the certain level of environment
to arrive a certain level of profit that they expected.

Mao ng importante na siya, kay indicator ni siya sa atong economic growth.

Thus, any indication of a downturn in the economy, a possible change of government, war or a rise
in oil or other commodity prices may reduce the expected benefit or increase the expected cost of
investment.

Forecast of revenues and costs allows them to decide on an appropriate level of investment.

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And so because of these factors, muvary ang decision sa paginvestsa usa ka investor. They will
forecast the revenues and cost to make sure that the expected rate of return will exceed the cost
pero of course, it will not be a guarantee kay sa sudden changes sa atong economy.