Stockbroker Role in Direct Investment

This assignment delves into the crucial role of a stockbroker in facilitating direct investment approaches to share market participation. It outlines key responsibilities such as portfolio management, providing investment recommendations, appraising potential risks, conducting market analysis, optimizing returns for clients, and suggesting optimum investment strategies tailored to individual investor objectives. The text emphasizes the importance of informed decision-making and transparency in this process.

Running head: CAPITAL MARKET
Capital Market
Name of the Student:
Name of the University:
Authors Note:

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Role of a stockbroker in direct investment approach to share investment
A stockbroker is a person who plays the role of a mediator between the investors and the
companies in which the investors their funds by acquiring shares of such companies. Thus, the
definition of a stockbroker itself will help us to understand about the important role that a
stockbroker plays (Cox et al., 2014). In respect of direct investment, approach to investment in
shares the roles of a stockbroker is explained below in brief.
Managing the portfolio of the client:
The stockbrokers have the responsibility to manage the portfolios of his or her clients to
ensure that the clients are in a position to earn stable return on his investment at minimum
amount of risk.
Suggesting the best possible course of investment decisions:
The stockbroker will provide the investors with best possible investment strategies by
suggesting the shares of different companies in which they should invest in order to earn
maximum amount of return at a given level of risk. It is important to note that the stockbroker
does not have the final authority to invest the money of the client. The stockbroker can only
recommend and suggest the final decision of investment lies with the investor himself (Gitman et
al., 2015).
Appraising the investors about all possible risks:
The stockbrokers need to provide all relevant information about the different risks that
are associated with the direct investment approach to ensure that the investors are aware of all

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possible risks of investment in shares of different companies before taking final decision of
whether to invest or not in the shares of a company.
Analysis of different investment strategies:
The Stockbrokers are aware of the complexities of stock market and professionally
equipped to conduct different analysis of the market. Thus, the stockbrokers must also enlighten
the investors by providing those results of different analysis and making it sure that the investors
understand such analysis to take better decisions in relation to utilization of their funds (Gitman
et al., 2015).
Optimizing returns for the investors:
The stock market is an unpredictable place with many investors looking to maximize
their investment by investing in the market. However, there is no guarantee provided that the
investment made by the investor will be profitable or give positive return. Similarly, the
stockbrokers though do not guarantee maximization of investors’ return but optimization of
return of investors is one of the most important objectives of the investor.
Optimum investment strategy:
An optimum investment strategy shall be suggested to an investor by assessing the
objectives of the investor. Investors have different objectives, i.e. some may have the objective to
maximize their return and thus do not hesitate to accept high amount of risk, whereas there may
be others who are not willing to accept high risk (Sullivan & Mackenzie, 2017). Thus, the
stockbroker will have to evaluate the objective of different investors and accordingly will have to
suggest them the optimum investment strategy.

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References:
Cox, J. D., Hillman, R. W., & Langevoort, D. C. (2016). Securities regulation: cases and
materials. Wolters Kluwer Law & Business.
Gitman, L. J., Joehnk, M. D., Smart, S., & Juchau, R. H. (2015). Fundamentals of investing.
Pearson Higher Education AU.
Gitman, L. J., Juchau, R., & Flanagan, J. (2015). Principles of managerial finance. Pearson
Higher Education AU.
Sullivan, R., & Mackenzie, C. (Eds.). (2017). Responsible investment. Routledge.