Which of the following should not be a basis of an investment policy?

Investment policies should primarily focus on guiding the investment decisions of an individual or organization in a manner that aligns with their financial goals, risk tolerance, and investment horizon. While profit maximization is certainly a goal in many investment scenarios, it should not serve as a standalone basis for an investment policy.

Profit maximization can lead to behavior that emphasizes short-term gains over long-term stability and sustainability, potentially exposing an investor to excessive risks or unethical investment practices. In contrast, a well-crafted investment policy is anchored in principles that promote stability, security, and a balanced approach to risk and reward.

Prudence, diversification, and reasonable risk play crucial roles in a sound investment policy. Prudence ensures careful decision-making to protect capital and resources. Diversification helps reduce risk by spreading investments across various asset classes, which can mitigate the impact of poor performance in any single investment. Reasonable risk acknowledges that some level of risk is inherent in investing, but it should be well-managed and appropriate to the investor's objectives.

By focusing on these foundational principles rather than solely on profit maximization, an investment policy can foster sustainable growth while ensuring the investor's long-term objectives are met.