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Investments Ch. 1
Investments Ch. 1 Spring 2012
Question | Answer |
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investment | any asset into which funds can be placed with the expectation that it will generate positive income and/or preserve or increase its value |
Two forms of rewards | rewards are also known as returns. 1. income, 2. increased value |
securities | investments issued by firms, governments, or other organizations that represent a financial claim on hte resources of the issuer. The most common types of securities are stocks and bonds |
direct investmetn | one in which an investor directly acquires a claim on a security or property |
indirect investment | an investment in a collection of securities or properties managed by a professional investor. For example mutual funds. |
debt | a loan that obligates the borrower to make periodic interest payments and to repay the full amount of the loan by some future date.debt instruments are known as bonds. The issuer agrees to pay interest for a specified time and at the end, repay the loan. |
equity | represents ongoing ownership in a business or property. most common is commons stock. |
derivative securities | derive their value from an underlying security or asset. For example stock options - an investmetn that grants the right to purchase or sell a share of stock in a company at a fixed price for alimited period of time. Derivative securities are is neither d |