Podcast
Questions and Answers
Which of the following best describes investment?
Which of the following best describes investment?
- Exchanging goods and services in the present with the expectation of a higher return in the future
- Spending money on goods for immediate consumption
- Holding cash for potential future use
- Acquiring an asset or committing money with the purpose of earning future income or benefiting from future appreciation in value (correct)
What is the purpose of investment?
What is the purpose of investment?
- To hold onto assets without any intention of future gain
- To make money work for you or let your money grow (correct)
- To spend excess cash on immediate consumption
- To minimize risk and maximize immediate returns
What is the likelihood associated with risk in investments?
What is the likelihood associated with risk in investments?
- High risk in all types of investments
- High risk in government securities and low risk in stocks and new business ventures
- Low risk in all types of investments
- Low risk in government securities and high risk in stocks and new business ventures (correct)
Which category of investment includes debentures and bonds?
Which category of investment includes debentures and bonds?
What distinguishes variable income investments such as equities and real estate?
What distinguishes variable income investments such as equities and real estate?
Fixed income investments always provide a fixed return annually
Fixed income investments always provide a fixed return annually
Variable income investments, such as equities and real estate, do not appreciate in value in the long term
Variable income investments, such as equities and real estate, do not appreciate in value in the long term
Investment is the purchase of goods aimed at earning income in the present
Investment is the purchase of goods aimed at earning income in the present
Investments in government securities are associated with high risk
Investments in government securities are associated with high risk
The purpose of investment is to make money work for you or let your money grow
The purpose of investment is to make money work for you or let your money grow
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Study Notes
Investment Basics
- Investment is the act of putting money into something with the expectation of earning a profit or income.
Purpose of Investment
- The primary purpose of investment is to make money work for you or let your money grow.
Risk in Investments
- Risk in investments is associated with uncertainty, and the likelihood of loss or gain is unknown.
Types of Investments
- Debt investments include debentures and bonds, which offer a fixed return.
- Variable income investments, such as equities and real estate, have a potential for growth in value over time.
Characteristics of Fixed and Variable Income Investments
- Fixed income investments provide a fixed return annually, such as bonds and debentures.
- Variable income investments do not offer a fixed return, but have the potential for long-term growth in value, for example, equities and real estate.
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