10 Questions
Which of the following best describes investment?
Acquiring an asset or committing money with the purpose of earning future income or benefiting from future appreciation in value
What is the purpose of investment?
To make money work for you or let your money grow
What is the likelihood associated with risk in investments?
Low risk in government securities and high risk in stocks and new business ventures
Which category of investment includes debentures and bonds?
Fixed income investments
What distinguishes variable income investments such as equities and real estate?
They do not provide a fixed return annually and their value appreciates in the long term
Fixed income investments always provide a fixed return annually
True
Variable income investments, such as equities and real estate, do not appreciate in value in the long term
False
Investment is the purchase of goods aimed at earning income in the present
False
Investments in government securities are associated with high risk
False
The purpose of investment is to make money work for you or let your money grow
True
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.
Test your knowledge of investment definitions with this quiz. Learn about the various meanings and purposes of investment in financial terms.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
