Introduction to Investments and Market Analysis Overview
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Questions and Answers

What is an investment?

  • A current commitment of resources for a period of time in the expectation of receiving future resources (correct)
  • Selling shares from Commsec International
  • Buying and selling stocks on Plus 500
  • Watching market returns on CNBC website

What are investors compensated for in an investment?

  • The time the resources are committed, expected rate of inflation, and uncertainty of future payments (correct)
  • Fluctuations in interest rates
  • The performance of NASDAQ, DOW, and S&P 500
  • Current market returns

What did the provided text mention as part of market analysis?

  • Buying and selling stocks on Plus 500
  • Looking up market returns on CNBC website (correct)
  • Selling shares from Commsec International
  • Watching YouTube videos about market trends

According to the text, what investment options are available on Plus 500?

<p>Oil and bitcoin (B)</p> Signup and view all the answers

What is the real risk-free rate of interest?

<p>The pure rental rate on money in the absence of inflation and risk (B)</p> Signup and view all the answers

Why is the real risk-free rate usually positive?

<p>Savers need compensation in order to give up the right to consume today (D)</p> Signup and view all the answers

What does the Fisher equation (1 + i) = (1 + r)(1 + π) represent?

<p>Nominal interest rate (directly observable) (A)</p> Signup and view all the answers

What can the Fisher equation i=r+Ï€ be reduced to?

<p>$i=r+Ï€$ (D)</p> Signup and view all the answers

What is an example of ex-post real rates being negative?

<p>Your grandmother's term deposit with a fixed interest rate of 4% (B)</p> Signup and view all the answers

Can ex-ante real rates be negative?

<p>Yes, if the official rate is very close to zero for many years (A)</p> Signup and view all the answers

What does a negative nominal interest rate suggest?

<p>Concerns about very weak world growth and deflation (C)</p> Signup and view all the answers

What is deflation?

<p>A decrease in the general price level of goods and services (C)</p> Signup and view all the answers

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