What does due diligence involve in investment?

Due diligence involves the thorough investigation or review of all relevant information before entering into an investment. This process is critical for investors to evaluate the potential risks and returns associated with the investment. By conducting due diligence, investors can gather necessary data such as financial statements, market analysis, and legal considerations, which help in making informed investment decisions.

The other options, while related to various aspects of finance and investment, do not encapsulate the complete essence of due diligence. For instance, calculating financial projections, filing tax returns, and preparing financial statements are specific tasks that may occur as part of the investment process, but they do not represent the broader investigative scope that due diligence encompasses. This option signifies a proactive approach to identifying potential issues, verifying claims made by the investment, and ultimately protecting the investor's interests.