Marginal investment

Also known as: unprofitable investment

A marginal investment is an investment where the expected return is just above the limit of a risk-free investment.

Definition / explanation

Such a marginal investment is also known as an unprofitable investment. As a rule, it brings little or no profit, and in such cases this is usually below the market interest rate. The fact that there is no profit is usually calculated in advance using an internal profitability calculation.

Reasons for a marginal investment

The reason for a marginal investment can be to avoid downsizing or to complete or expand the in-house range. Another reason can be the achievement of permanent independence of the company.

Summary

  • little or no profit on marginal investment
  • is called an unprofitable investment
  • Reasons: avoiding downsizing, expanding the range, independence of the company
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