The application of utility function for investment decision-making

Abstract

The authors of the paper pay great attention to the impact of globalization on financial markets, because financial markets are the leaders of the ongoing process of globalization. Due to the increasing number of investors the amount of investments is increasing as well. Moreover, the wide interest of investment is being noticed within the population, companies and even countries. While at the same time the number of investment management companies is increasing in global markets. So, there is a need to prepare the conceptual investment foundations and methods in the global financial markets. The authors suggest using utility function for identification of opportunities offered by the market. The application of utility function allows identify the most suitable markets for investors, evaluating them according to four criteria: utility, profitability, reliability and riskiness. The indicator of utility level, which ranks selected market according to potentially best investment opportunities for investors, is proved plenty efficient.