Business Finance ( Concept of Interest & Investment

Question 1

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

Answer 1

Investment

Question 2

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

Answer 2

Appreciation

Question 3

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.

Answer 3

Time, money, or effort

Question 4

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

Answer 4

Investment

Question 5

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

Answer 5

The act of investing/ investing

Question 6

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

Answer 6

Bonds, stocks, or real estate property

Question 7

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

Answer 7

Investment

Question 8

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

Answer 8

economic growth

Question 9

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

Answer 9

Economic Investments

Question 10

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.

Answer 10

Economic Investments

Question 11

GDP stands for

Answer 11

Gross domestic product

Question 12

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.

Answer 12

Investment Vehicles or Investment Bank

Question 13

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

Answer 13

Investment Banking

Question 14

What can Investment banks do?

Answer 14

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.

Question 15

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

Answer 15

Investment banks/ Investment vehicles

Question 16

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

Answer 16

Stocks

Question 17

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

Answer 17

Stocks

Question 18

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

Answer 18

General Motors, Apple, and Facebook

Question 19

sell stocks to investors.

Answer 19

Brokers

Question 20

you’re essentially lending money to an entity.

Answer 20

Bonds

Question 21

Generally, this is a business or a government entity.

Answer 21

Bonds

Question 22

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

Answer 22

Corporate,
Municipal,
Treasury

Question 23

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

Answer 23

Bonds

Question 24

especially, however, are considered a very safe investment.

Answer 24

Treasury Bonds

Question 25

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

Answer 25

Mutual funds

Question 26

can be actively managed or passively managed.

Answer 26

Mutual Funds

Question 27

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

Answer 27

Actively Managed Fund

Question 28

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

Answer 28

Fund Managers

Question 29

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

Answer 29

passively managed fund

Question 30

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

Answer 30

Mutul funds

Question 31

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

Answer 31

Mutual Funds

Question 32

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

Answer 32

Mutual Funds

Question 33

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

Answer 33

Exchange-traded funds

Question 34

are bought and sold on the stock markets.

Answer 34

Exchange Traded Funds

Question 35

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

Answer 35

Exchange traded funds

Question 36

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

Answer 36

Exchange traded funds

Question 37

is a very low-risk investment.

Answer 37

Certificate of deposit

Question 38

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

Answer 38

certificates of deposit

Question 39

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

Answer 39

certificate of deposit

Question 40

There are no major risks to

Answer 40

certificates of deposit

Question 41

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.

Answer 41

certificates of deposit

Question 42

There are a number of types of retirement plans.

Answer 42

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

Question 43

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

Answer 43

traditional or roth variety

Question 44

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

Answer 44

Retirement plans

Question 45

The biggest advantage for retirement plans

Answer 45

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.

Question 46

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

Answer 46

retirement plan

Question 47

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

Answer 47

annuities

Question 48

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

Answer 48

annuities/annuity

Question 49

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

Answer 49

Annuities

Question 50

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

Answer 50

Annuities

Question 51

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

Answer 51

Annuities

Question 52

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

Answer 52

Annuities

Question 53

a fairly new investment option.

Answer 53

Cryptocurrencies

Question 54

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

Answer 54

Bitcoin

Question 55

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

Answer 55

Cryptocurrencies

Question 56

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

Answer 56

Cryptocurrencies

Question 57

are physical products you can buy.

Answer 57

Commodities

Question 58

examples of commodities

Answer 58

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

Question 59

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

Answer 59

Commodities

Question 60

can greatly change the value of something

Answer 60

Political actions

Question 61

can impact the value of agricultural products.

Answer 61

weather

Question 62

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

Answer 62

Financial Advisor

Question 63

4 ways to reduce your investment risk

Answer 63

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

Question 64

Explain how important investment is in a business.

Answer 64

-impromtu.

Question 65

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

Answer 65

-impromptu.

Question 66

The most basic finance-related formula

Answer 66

Computation of Interest

Question 67

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

Answer 67

Interest

Question 68

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

Answer 68

simple interest

Question 69

is simply earning interest on interest.

Answer 69

Compound Interest

Question 70

The usual assumption in most business transaction is to use the

Answer 70

compound interest