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FINALS > Business Finance ( Concept of Interest & Investment > Flashcards

Business Finance ( Concept of Interest & Investment Flashcards

1
Q

is an asset or item acquired with the goal of generating income or
appreciation.

A

Investment

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2
Q

refers to an increase in the value of an asset over time.

A

Appreciation

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3
Q

An investment
always concerns the outlay of some asset today—________,________,or ______—in hopes
of a greater payoff in the future than what was originally put in.

A

Time, money, or effort

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4
Q

can refer to any mechanism used for generating future
income, including bonds, stocks, real estate property, or a business,
among other examples.

A

Investment

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5
Q

has the goal of generating income and increasing value
over time.

A

The act of investing/ investing

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6
Q

Investment includes the purchase of ______, ______, or ____ _____ ______, among
other examples.

A

Bonds, stocks, or real estate property

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7
Q

any action that is taken in the hopes of raising future revenue

A

Investment

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8
Q

Within a country or a nation, _______ _______ is related to investments.

A

economic growth

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9
Q

When
companies and other entities engage in sound business investment practices,it
typically results in economic growth.

A

Economic Investments

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10
Q

if an entity is engaged in the production of goods, it may
manufacture or acquire a new piece of equipment that allows it to produce more
goods in a shorter period of time.

A

Economic Investments

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11
Q

GDP stands for

A

Gross domestic product

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12
Q

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.

A

Investment Vehicles or Investment Bank

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13
Q

may also refer to a specific division of banking related
to the creation of capital for other companies, governments, and other entities.

A

Investment Banking

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14
Q

What can Investment banks do?

A

underwrite new debt and equity securities for all types of
corporations, aid in the sale of securities, and help to facilitate mergers and
acquisitions, reorganizations, and broker trades for both institutions and private
investors.

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15
Q

may also provide guidance to companies who are
considering issuing shares publicly for the first time, such as with an initial public
offering (IPO).

A

Investment banks/ Investment vehicles

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16
Q

may be the most well-known and simple type of investment.

A

Stocks

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17
Q

you’re buying an ownership share in a publicly traded company.

A

Stocks

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18
Q

Many of the biggest companies in the country — think ___________-, _______and
_________— are publicly traded, meaning you can buy stock in them.

A

General Motors, Apple, and Facebook

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19
Q

sell stocks to investors.

A

Brokers

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20
Q

you’re essentially lending money to an entity.

A

Bonds

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21
Q

Generally, this is a business or a government entity.

A

Bonds

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22
Q

Companies issue _____
bonds, whereas local governments issue _______ bonds. The U.S. Treasury issues
______bonds.

A

Corporate,
Municipal,
Treasury

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23
Q

The rate of return for ______ is typically much lower than it is for stocks, but
______also tend to be lower risk.

A

Bonds

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24
Q

especially, however, are considered a very safe investment.

A

Treasury Bonds

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25
Q

is a pool of many investors’ money that is invested broadly in
a number of companies.

A

Mutual funds

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26
Q

can be actively managed or passively
managed.

A

Mutual Funds

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27
Q

has a fund manager who picks companies and
other instruments in which to put investors’ money.

A

Actively Managed Fund

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28
Q

try to beat the
market by choosing investments that will increase in value.

A

Fund Managers

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29
Q

simply tracks a major stock market index like the Dow Jones Industrial
Average or the S&P 500.

A

passively managed fund

30
Q

only in stocks, others only in
bonds and some in a mixture of the two.

A

Mutul funds

31
Q

carry many of the same risks as stocks and bonds, depending
on what they are invested in.

A

Mutual Funds

32
Q

The risk is lesser, though, because the investments
are inherently diversified.

A

Mutual Funds

33
Q

are similar to mutual funds in that they are a
collection of investments that tracks a market index.

A

Exchange-traded funds

34
Q

are bought and sold on the stock
markets.

A

Exchange Traded Funds

35
Q

Their price fluctuates throughout the trading day, whereas mutual funds’
value is simply the net value of your investments.

A

Exchange traded funds

36
Q

are often recommended to new investors because they’re more
diversified than individual stocks.

A

Exchange traded funds

37
Q

is a very low-risk investment.

A

Certificate of deposit

38
Q

You give a bank a
certain amount of money for a predetermined amount of time.

A

certificates of deposit

39
Q

The longer the loan period, the higher your interest rate.

A

certificate of deposit

40
Q

There are no major risks to

A

certificates of deposit

41
Q

That said, you
have to make sure you won’t need the money during the term of the —-, as there
are major penalties for early withdrawals.

A

certificates of deposit

42
Q

There are a number of types of retirement plans.

A

Workplace retirement plans,
sponsored by your employer, include 401(k) plans and 403(b) plans.

43
Q

If you don’t
have access to a retirement plan, you could get an individual retirement plan (IRA),
of either the

A

traditional or roth variety

44
Q

aren’t a separate category of investment, per se, but a vehicle for
making investments, including purchasing stocks, bonds and funds.

A

Retirement plans

45
Q

The biggest
advantage for retirement plans

A

is that you put in
pre-tax dollars. You won’t pay taxes on the money until you withdraw it in
retirement, when you will presumably be in a lower tax bracket.

46
Q

The risks for the
investments are the same as if you were buying the investments outside of a

A

retirement plan

47
Q

Many people use _____ as part of their retirement savings plan.

A

annuities

48
Q

you purchase a contract with an insurance company and, in
return, you get periodic payments.

A

annuities/annuity

49
Q

The payments may begin right away or at a
specified future date.

A

Annuities

50
Q

They may last until death or only for a predetermined period
of time.

A

Annuities

51
Q

fairly low risk, they aren’t high-growth.

A

Annuities

52
Q

They make a
good supplement to retirement savings, rather than an integral source of funding.

A

Annuities

53
Q

a fairly new investment option.

A

Cryptocurrencies

54
Q

is the most
famous cryptocurrency, but there are countless others.

A

Bitcoin

55
Q

are
digital currencies that don’t have any government backing.

A

Cryptocurrencies

56
Q

often have wild fluctuations, making them a very risky investment.

A

Cryptocurrencies

57
Q

are physical products you can buy.

A

Commodities

58
Q

examples of commodities

A

wheat, barley and corn, or energy products like oil, coal or solar
power. Precious metals like gold and silver (most common)

59
Q

investing run the risk that the price of the product will go down
quickly.

A

Commodities

60
Q

can greatly change the value of something

A

Political actions

61
Q

can impact the value of agricultural products.

A

weather

62
Q

helps you put together an investing plan that will utilize a
number of the above types of investments.

A

Financial Advisor

63
Q

4 ways to reduce your investment risk

A
  1. Have a diversified portfolio of onvestments
  2. Know your investment goals
  3. Keep a close eye on your investments
  4. Watch out for scammers
64
Q

Explain how important investment is in a business.

A

-impromtu.

65
Q

Among the types of investments which do you think is the easiest. Why?

A

-impromptu.

66
Q

The most basic finance-related formula

A

Computation of Interest

67
Q

is earned or incurred for the use of the principal amount over
the relevant time period.

A

Interest

68
Q

If the interest earned or incurred is always based on the original principal,
then _______ ________ is assumed.

A

simple interest

69
Q

is simply earning interest on interest.

A

Compound Interest

70
Q

The usual assumption in most business transaction is to use the

A

compound interest

FINALS (5 decks)

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