Week 2 discussion 1 Assignment Example | Topics and Well Written Essays - 750 words

Week 2 discussion 1 - Assignment Example Fixed incomes are also invested in the forms of bonds, where investors are paid a set rate of interest on their principal over a given period of time (Farris, Neil, Phillip and Reibstein, 2010). Depending on the period of investment, fixed income has been used for both short term and long term investment and also as important methodologies for maintaining portfolio risks (Kane and Marcus, 2011). Once this is done, the major concentration of investors is on currency shocks, when bond investments are made in foreign currency. Given how diverse the business environment that exists in Kuwait is, diversification is something that is very possible for investors. This is because there are as many investment avenues as possible that investors who prefer diversification may look into. In all cases, there are two major options. The first is for those who want to undertake cross-sectional diversification, where they engage in investments in two different asset areas (Khan, 2013). There also exists longitudinal diversification, where investors may choose different forms of investments in the same asset area. In comparing the use of equity to fixed income, it would be noted that those engaged in equity have more opportunity to longitudinal diversification as compared to those engaged in the use of fixed income. This is because with those engaged in equity, there continues to be impressive performances of companies on the stock exchange that command investor confidence and making diversification strategies optionall y abundant. Money market may not be considered as totally missing in Kuwait but its popularity is very minimal, less preferred and relatively unpopular. This is not because the money market does not have the needed potential to guarantee return on investment, as money market is noted to be one of the safest liquid investments (Kotler, 2006). Money market is rather not popular in the country because of its short term nature. In the country, most investors have been