Investments Concepts Overview

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Questions and Answers

What is the main goal of investing?

To spend money quickly
To achieve long-term financial goals (correct)
To minimize financial risk
To keep money stagnant

What is a portfolio?

A single investment
An investment with high liquidity
An investment with guaranteed returns
A collection of different investments (correct)

What does liquidity refer to in investments?

The stability of the investment value
The ability to buy and sell quickly (correct)
The ability to generate income
The long-term growth potential

Which type of investment includes real assets like land and buildings?

Real property (B) Signup and view all the answers

What is the difference between direct and indirect investments?

Direct investments involve acquiring ownership directly, while indirect investments involve acquiring ownership through a professional manager (C) Signup and view all the answers

What is the main difference between Debt and Equity securities?

Debt securities provide interest income and repayment of loan, while Equity securities provide ongoing ownership in a business. (C) Signup and view all the answers

What is the primary characteristic of High-risk investments?

They are less predictable. (D) Signup and view all the answers

What is the main distinction between Short-Term and Long-Term investments?

Short-Term investments have maturities of longer than one year, while Long-Term investments have maturities of one year or less. (C) Signup and view all the answers

How do Financial Institutions participate in the investment process?

By pooling the resources of households and making loans or investing in securities. (A) Signup and view all the answers

Who are considered Institutional Investors?

Investment professionals who manage other people's money. (D) Signup and view all the answers