Investment Concepts to Risk and Return Flashcards
Investor who is willing to accept equal levels of expected return for higher levels of risk.
RISK-NEUTRAL INVESTORS
Investors willing to accept lower levels of expected returns for higher levels of risk.
RISK-TAKER INVESTORS
- investors who select a portfolio that maximizes expected return for any given level of risk or;
- investors that minimize risk for any given level of expected return.
RISK-AVERSE INVESTORS
The aggregate of assets held as investments
INVESTMENT PORTFOLIO
How investible funds are allocated between the different investment items.
INVESTMENT MIX
Amount of cash that an entity must have to take care of unexpected cash requirements
LIQUIDITY BUFFER
Amount of money that an entity can afford to invest for a definite period without hampering his day-to-day operations
INVESTABLE CASH
- assets acquired to realize income
- expected to increase one’s equity
- expected to reduce future financial worries
- sacrifice of some current pleasures with hope that resources acquired will enhance the future
INVESTMENT
Investment which entails more risks but bigger rewards.
OFFENSIVE INVESTMENT
Investment which entails less risks but smaller rewards.
DEFENSIVE INVESTMENT
Person or office given the authority to make decisions regarding the investments of an entity.
PORTFOLIO MANAGER
Reasons for Investing: INCOME
to provide or supplement their income.
Reasons for Investing: APPRECIATION
to increase the value of an investment.
Reasons for Investing: EXCITEMENT
investing is frequently someone’s hobby.
Reasons for Investing: FINANCIAL LIMITATIONS
play it safe by putting money in fixed income and low-risk financial instruments.
Reasons for Investing: TIME HORIZON
When the time horizon is short, the less risky investment vehicles should be chosen.
Reasons for Investing: MARKET TIMING
One should get in and out of the market at the most opportune time.
Represents ownership interest in an issuing corporation.
EQUITY SECURITIES
Obligations that mature in one year or less.
SHORT-TERM DEBT SECURITIES
Obligations that mature in more than one year.
INTERMEDIATE AND LONG-TERM DEBT SECURITIES
Securities that have characteristics of both equity and debt.
HYBRID SECURITIES
Securities that derive their value from the value of an underlying asset.
DERIVATIVE SECURITIES
Non-financial assets
REAL ASSETS
Investments by individuals in debt or equity securities issued by an organization outside the country of residence of the investor.
INTERNATIONAL INVESTMENTS
