Question: Which Are The Most Likely Uses Of Capital Invested In A Business? Check All That Apply.

How does an investor make money off debt?

They are debt obligations, meaning that the investor loans a sum of money (the principal) to a company or a government for a set period of time, and in return receives a series of interest payments (the yield).

When the bond reaches its maturity, the principal is returned to the investor..

What is the relationship between risk and return?

A positive correlation exists between risk and return: the greater the risk, the higher the potential for profit or loss. Using the risk-reward tradeoff principle, low levels of uncertainty (risk) are associated with low returns and high levels of uncertainty with high returns.

Which of the following are the most common types of bonds?

There are three basic types of bonds: U.S. Treasury, municipal, and corporate.Treasury Securities. Bonds, bills, and notes issued by the U.S. government are generally called “Treasuries” and are the highest-quality securities available. … Municipal Bonds. … Corporate Bonds. … Zero-Coupon Bonds.

What is buying and selling securities?

Buyers and sellers do not trade securities directly, as they do in broker markets. They work through securities dealers called market makers, who make markets in one or more securities and offer to buy or sell securities at stated prices.

Which types of investments are securities?

3 Types of Securities Investments ExplainedWhat Is a Security? Securities are financial instruments that can be traded on financial exchanges. … What Are Stocks? Stocks are equity securities. … What Are Bonds? Bonds are debt securities. … What Are Derivatives? A derivative’s value is derived (hence the name derivative) from the value of the underlying asset.

Which factors can affect a stocks price?

However, there a number of factors that can move stocks up and down.Demand and Supply. Demand and supply in the market affect the prices of shares. … Interest Rates. … Investors. … Dividends. … Management. … Economy. … Political Climate. … Short-Term and Long-Term Investors.More items…

What is one way in which bonds do not generate income for investor?

Investors buy bonds to hold them until maturity such that profits can be earned from the interest payments. Bonds appreciate in value and pay interest. However, investors cannot generate income from bonds by the specified amount they pay at maturity.

Which best describes what a market index does?

Which best describes what a market index does? An index measures market performance. Once stocks are on the market, which best explains how their prices are set? Prices fluctuate on the basis of demand.

What is an investor’s primary goal?

The primary objective of the high-risk income investor is to generate the highest possible income without losing any principal. Although many income investments are considered lower-risk, there are a number of high-risk income options, including high-yield bonds.

What is the safest type of investment?

For example, certificates of deposit (CDs), money market accounts, municipal bonds and Treasury Inflation-Protected Securities (TIPS) are among the safest types of investments. … Money market accounts are similar to CDs in that both are types of deposits at banks, so investors are fully insured up to $250,000.

What is one way in which bonds do not generate income for investors quizlet?

What is one way in which bonds do not generate income for investors? Bonds appreciate in value. … Yes, the payment of dividends indicates that a stock’s value has increased. No, the payment of dividends indicates that a company has earned profits.

Which best describes the role that the government and business play in investments?

Which best describes the role that government and business play in investments? They both receive capital to use for growth.

What are common types of bonds that are currently issued?

The common types of bonds that are currently issued are corporate bonds, municipal bonds, treasury bills, and treasury notes.

What are 4 types of investments?

There are four main investment types, or asset classes, that you can choose from, each with distinct characteristics, risks and benefits.Growth investments. … Shares. … Property. … Defensive investments. … Cash. … Fixed interest.