An investment is an item or thing acquired with the purpose of generating income or appreciation. It is called "appreciation" when an asset's worth rises in the future. When someone buys something as an investment, the goal isn't to consume it right away but to utilize it to build wealth in the future.
Investment is usually an outflow of some capital today— time, effort, money, or an asset— with expectations of a bigger return in the future than what was initially put in. For instance, an investor could buy a monetary asset today with the asset that it would generate income in the future or that it will be sold at a better price later for a profit.
Characteristics of Investment
- The act of putting capital to work in the present with the intention of boosting that money's worth in the future is known as investing.
- Investing is the act of putting money, time, or effort to use with the hopes of reaping a greater return in the future.
- An investment is any medium or technique that is employed for the purpose of creating future income. Some examples of investments include bonds, equities, real estate property, and businesses, amongst other possibilities.
Investments that can be made by an Individual
For the ordinary individual, investing in stocks, bonds, and CDs is uncomplicated. If you own stock in a company, you are entitled to a portion of the firm's future income, as well as the opportunity to vote on how the company is run based on the number of shares you own. Bonds and CDs are debt investments in which the borrower invests money in a project that is projected to generate more cash flow than the interest owing to the investors.
Following are some of the multiple choice questions on the Investment with answers that will help the students in developing their knowledge.
Investment MCQ
1. The chart used to show the value of a $1 through various investments and timeframes is called:
2. If a company files for bankruptcy, which of the following securities is most at risk of becoming virtually worthless
3. Which of the following has the highest level of risk?
4. Which is the most liquid form of savings?
5. A raw material or primary agricultural product that can be bought and sold, such as copper or coffee
6. Money set aside for unanticipated expenses or loss of income
7. Which statement describes SIMPLE interest?
8. Which is better for you when you are investing money?
9. Which of the following would increase the cost of capital to the firm (holding constant the other elements of the cost of capital)?
10. Which of the following is not traded in Bursa Malaysia?
12. When the company makes a profit it gives the shareholders a
13. Which of the following is the reason of why company goes public?
14. How many methods of raising capital in secondary market?
15. Which of the following is the securities market in Malaysia?
16. A sudden and extreme downturn in stock performance/value
17. Shares investment are the component of
18. A bond, often having tax advantages for individual investors, issued by a state or local government, typically uses the loan to pay for public works to benefit its citizens.
19. The two broad category of investment alternatives are
20. The time period an investment is intended to last
21. A payment made by a publicly traded corporation to its shareholders
22. The overall collection of investments held by a person.
23. A collection of stocks and/or bonds combined into one fund, which will be traded as a unit, typically chosen and actively managed by an expert in exchange for a fee from each investor.
24. Buying and Selling StocksRandy just bought 800 shares of stock in Facebook at $19.50 per share. A stock company that you have been working with charges $10 per transaction and you want to sell because the current rate for your shares skyrocketed and is at $34.50 per share. How much did Randy buy from Facebook?
25. Price paid at the purchase of bonds
26. A part into which a companies capital is divided, entitling the shareholder to a portion of the profits.
27. A type of savings that signifies that you own a part of a corporation and a claim to their assets and earnings.
28. The owner of a companies shares.
29. An amount of money paid by a company regularly to it's shareholders
30. An investment program funded by shareholders that trades in diversified
31. Money borrowed for a project where their price is a function of the law of supply and demand. People who buy these ______ are lending money for a project.
32. Business fixed investment
33. Inventory investment includes spending on
34. The flexible accelerator model of investment can be shown as
35. High interest rates will
36. If the life cycle theory of consumption holds, as the fraction of our population that is retired rises over the next 20 years, the national savings rate should
37. The largest component of investment is
38. Which of the following statements is (are) correct?
39. If the mortgage rate is 4 percent and the expected inflation rate is 6 percent, then the real borrowing cost would be
40. If a firm faces financing constraints on its investment spending, the most important determinant of how much it invests will be the
41. Investment in the national income accounts includes which of the following?
42. Keynesians argue that investment is the most volatile component of GDP because of
43. In the accelerator model of investment, when there is no change in output then investment is
44. Degree of uncertainty on how likely the investor is to make money on an investment
45. A certificate issued by a bank to a person depositing money for a specified length of time.
46. There are no consequences for withdrawing money from a CD before the maturity date
47. A security in which the investor loans money to a company or government, then pays regular interest to the bondholder and returns the principal on the bond’s maturity date
48. The act of investing in a large variety of stocks, bonds and/or alternative investments, like gold or real estate, as a way to reduce your overall risk.
50. A mutual fund that invests in the stocks that are the basis of a well-known stock or bond index
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