Investments Concepts

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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?

Households (D) Signup and view all the answers

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

Trade financial assets between suppliers and demanders of funds (C) Signup and view all the answers

Who are institutional investors in the investment process?

People earning their living by managing other people’s money (D) Signup and view all the answers

What is the main goal of investing?

Grow your money to achieve long-term financial goals (A) Signup and view all the answers

Which of the following best describes a portfolio?

A collection of different investments (C) Signup and view all the answers

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

The ability to buy and sell quickly (C) Signup and view all the answers

Which of the following is considered a real property investment?

Buildings and land (C) Signup and view all the answers

What is the key difference between direct and indirect investments?

Direct investment involves direct acquisition of a claim, while indirect investment involves an intermediary (B) Signup and view all the answers

What do securities represent in the context of investments?

Investments issued by firms, governments, or other organizations that represent a financial claim on the issuer’s resources (A) Signup and view all the answers

Debt Security

Lending funds in exchange for interest income and repayment.

High-Risk Investment

Investments with lower predictability but potentially higher returns.