Investments Concepts
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Questions and Answers

What is the main characteristic of debt securities?

  • Derive value from an underlying asset
  • Uncertainty surrounding the return
  • Lending funds in exchange for interest income and repayment (correct)
  • Ownership in a business or property

    • Which type of investment is associated with lower predictability but higher average returns?

  • Derivative Securities
  • Debt
  • Equity
  • Low-Risk Investments (correct)

    • What distinguishes short-term from long-term investments?

  • Interest income generated
  • Uncertainty surrounding the return
  • Ownership in a business or property
  • Maturities of one year or less versus longer than one year (correct)

    • Which group is typically considered net suppliers of funds in the investment process?

    <p>Households</p> Signup and view all the answers

    What is the primary role of financial markets in the investment process?

    <p>Trade financial assets between suppliers and demanders of funds</p> Signup and view all the answers

    Who are institutional investors in the investment process?

    <p>People earning their living by managing other people’s money</p> Signup and view all the answers

    What is the main goal of investing?

    <p>Grow your money to achieve long-term financial goals</p> Signup and view all the answers

    Which of the following best describes a portfolio?

    <p>A collection of different investments</p> Signup and view all the answers

    What does 'liquidity' refer to in the context of investments?

    <p>The ability to buy and sell quickly</p> Signup and view all the answers

    Which of the following is considered a real property investment?

    <p>Buildings and land</p> Signup and view all the answers

    What is the key difference between direct and indirect investments?

    <p>Direct investment involves direct acquisition of a claim, while indirect investment involves an intermediary</p> Signup and view all the answers

    What do securities represent in the context of investments?

    <p>Investments issued by firms, governments, or other organizations that represent a financial claim on the issuer’s resources</p> Signup and view all the answers

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