Question

1. An investor owns 1,000 shares of IMAX Corporation. This individual thinks the company has a huge growing potential and decides not to sell any of the holdings. Explain the underlying behavior finance concepts involved and how they drive the investment decision making.

Answer 1

This is a form of 'Long term capital investment.' In this case the investors will hold the shares of a company for more than 1 years. It will result a long term capital gains/losses.

The technological changes and advancements may uncover previously unknown opportunities, so the technological aspects are very important.How competition may affect the market landscape and potentially change previous assumptions etc. should be considered.Fiscal incentives, such as tax reductions, grants, and subsidies are some of the major reasons for longterm investment.The market and changes in the market and economy should need to be monitored continuously.

A rational investor will analysis the above all factors before making any investment decisions. The above factors will drive an investor to make his decision.