Podcast
Questions and Answers
What does capital appreciation refer to?
What does capital appreciation refer to?
- The ability to make a profit from owning stock.
- The increased value of an asset. (correct)
- The profitable sale of shares.
- The distribution of earnings to shareholders.
Which factors can affect a stock's price? (Select all that apply)
Which factors can affect a stock's price? (Select all that apply)
- Location of the company
- The quantity of products produced
- The economy (correct)
- Market performance (correct)
- The company's financial health (correct)
Every investment carries some degree of risk.
Every investment carries some degree of risk.
True (A)
Which is one way in which bonds do not generate income for investors?
Which is one way in which bonds do not generate income for investors?
How does an investor make money off debt?
How does an investor make money off debt?
Which are common types of bonds that are currently issued? (Select all that apply)
Which are common types of bonds that are currently issued? (Select all that apply)
If a company pays dividends on a stock, that means the stock has appreciated in value.
If a company pays dividends on a stock, that means the stock has appreciated in value.
How does an investor make money from an equity investment?
How does an investor make money from an equity investment?
Which are the most likely uses of capital invested in a business? (Select all that apply)
Which are the most likely uses of capital invested in a business? (Select all that apply)
What is the role that government and business play in investments?
What is the role that government and business play in investments?
Which types of investments are securities?
Which types of investments are securities?
What does a market index measure?
What does a market index measure?
What is an investor's primary goal?
What is an investor's primary goal?
Which purpose is best served by markets?
Which purpose is best served by markets?
What generally occurs in financial markets?
What generally occurs in financial markets?
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Study Notes
Capital Appreciation
- Refers to the increased value of an asset, signifying profit potential from stock ownership.
Factors Affecting Stock Prices
- Market performance
- Company's financial health
- Economic conditions
Investments and Risk
- Every investment has some degree of risk; low-risk investments typically do not guarantee high returns.
Bonds and Income Generation
- Bonds do not generate income through dividends; instead, they provide interest payments, and a specified amount at maturity.
Earning Money from Debt Investments
- Investors earn money by receiving interest payments on bonds.
Common Types of Bonds
- Corporate bonds
- Municipal bonds
- Treasury bills
- Treasury notes
Dividends and Stock Value
- Payment of dividends indicates a company's profitability, not necessarily an appreciation in stock value.
Equity Investment Profits
- Investors profit from equity investments primarily by selling the asset at a higher price.
Uses of Capital in Business
- Capital is typically used for hiring workers, producing goods, distributing goods, and buying materials.
Role of Government and Business in Investments
- Both government and businesses receive capital to facilitate growth.
Types of Securities
- Investments classified as securities include both debt and equity instruments.
Market Index Function
- A market index measures market performance and helps gauge overall economic trends.
Investor's Primary Goal
- Investors aim to earn a profit on their investments.
Purpose of Financial Markets
- Financial markets serve as the venue where trades occur for various assets, ensuring efficient transaction processing.
Trading Activities in Financial Markets
- Various assets, including shares and commodities, are actively traded within financial markets.
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