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It is important to define your investment goals because it will help you in creating an investment plan. Your investment plan specifies where your capital
It is important to define your investment goals because it will help you in creating an investment plan. Your investment plan specifies where your capital will be invested and what investment vehicles you will use. To create an investment plan that will help in achieving your goals, it is important to understand the different ways you can invest.
Select the term associated with making investment decisions that corresponds to each of the given descriptions. Note: These are not necessarily complete definitions, but there is only one possible answer for each description.
Description
Term
Shares of ownership in the assets and earnings of a business corporation.
Interestbearing, negotiable certificates of longterm debt issued by a corporation that can be exchanged for common stock in the issuing company.
An investment company that combines the funds of investors who have purchased shares of ownership in it and then reinvests that money in a diversified portfolio of stocks and issued by other corporations or governments.
An investment in this can yield returns in the form of rents, capital gains, and certain tax benefits.
An investment that has some characteristics of both a stock and a bond.
Use your knowledge of different investment features and the information about the individuals below to complete the following paragraphs:
Clancy is an inexperienced investor with a relatively small amount of capital that he would like to invest in a wide variety of securities is his best investment option because of the diversification it offers to smaller investors and bigger investors alike.
Eileen is a slightly more confident investor than Clancy. She thinks that the technology sector is going to perform particularly well in the stock market in the coming months. Consequently, she chooses to buy shares of a particular technologycentered because, like
Clancy's purchase, this option also offers diversification, but it tends to be concentrated in a certain industry.
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