Questions and Answers
What does capital appreciation refer to?
Which factors can affect a stock's price? (Select all that apply)
Every investment carries some degree of risk.
True
Which is one way in which bonds do not generate income for investors?
Signup and view all the answers
How does an investor make money off debt?
Signup and view all the answers
Which are common types of bonds that are currently issued? (Select all that apply)
Signup and view all the answers
If a company pays dividends on a stock, that means the stock has appreciated in value.
Signup and view all the answers
How does an investor make money from an equity investment?
Signup and view all the answers
Which are the most likely uses of capital invested in a business? (Select all that apply)
Signup and view all the answers
What is the role that government and business play in investments?
Signup and view all the answers
Which types of investments are securities?
Signup and view all the answers
What does a market index measure?
Signup and view all the answers
What is an investor's primary goal?
Signup and view all the answers
Which purpose is best served by markets?
Signup and view all the answers
What generally occurs in financial markets?
Signup and view all the answers
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.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Test your knowledge on key concepts in investing and financial markets with these flashcards. From capital appreciation to stock price factors, deepen your understanding of essential financial principles.
