Investment Theory is a framework that helps individuals and institutions make decisions about where to allocate their financial resources. It focuses on understanding the relationship between risk and return, guiding investors to choose assets that align with their financial goals and risk tolerance. Key concepts include diversification, which spreads risk across various investments, and the efficient market hypothesis, suggesting that asset prices reflect all available information. The theory also examines different types of investments, such as stocks, bonds, and real estate, each with unique risk-return profiles. By analyzing historical data and market trends, investors can develop strategies to optimize their portfolios and achieve desired outcomes over time.