Busfin 2 Flashcards
is an asset or item acquired with the goal of generating income or appreciation.
INVESTMENT
refers to an increase in the value of an asset over time.
APPRECIATION
always concerns the outlay of some asset today—time, money, or effort—in hopes
of a greater payoff in the future than what was originally put in.
INVESTMENT
can refer to any mechanism used for generating future
income, including bonds, stocks, real estate property, or a business, among other examples.
INVESTMENT
Within a country or a nation, economic growth is related to investments. When
companies and other entities engage in sound business investment practices, it
typically results in economic growth.
Economic Investment
An investment bank provides a variety of services to individuals and
businesses, including many services that are designed to assist individuals and
businesses in the process of increasing their wealth.
Investment Vehicles
may be the most well-known and simple type of investment. When you buy this, you’re buying an ownership share in a publicly traded company. Many of the biggest companies in the country — think General Motors, Apple and Facebook — are publicly traded, meaning you can buy it in them.
Stocks
sell stocks to investors.
Brokers
When you buy a _____, you’re essentially lending money to an entity. Generally, this is a business or a government entity. Companies issue corporate bonds, whereas local governments issue municipal bonds. The U.S. Treasury issues
treasury bonds.
Bonds
fund is a pool of many investors’ money that is invested broadly in
a number of companies.
Mutual Funds
can be actively managed or passively
managed. An actively managed fund has a fund manager who picks companies and
other instruments in which to put investors’ money.
Mutual Funds
carry many of the same risks as stocks and bonds, depending
on what they are invested in. The risk is lesser, though, because the investments
are inherently diversified.
Mutual Funds
are similar to mutual funds in that they are a collection of investments that tracks a market index. Unlike mutual funds, which are purchased through a fund company, ETFs are bought and sold on the stock markets. Their price fluctuates throughout the trading day, whereas mutual funds’ value is simply the net value of your investments.
Exchange-traded funds (ETF’s)
are often recommended to new investors because they’re more diversified than individual stocks. You can further minimize risk by choosing an
ETF that tracks a broad index.
ETF’s
is a very low-risk investment. You give a bank a certain amount of money for a predetermined amount of time. When that time period is over, you get your principal back, plus a predetermined amount of
interest. The longer the loan period, the higher your interest rate.
Certificate of Deposit