FAQ: Which Of The Following Financial Assets Is Considered To Be Essentially Risk-free?

A risk-free asset is one that has a certain future return—and virtually no possibility of loss. Debt obligations issued by the U.S. Department of the Treasury (bonds, notes, and especially Treasury bills) are considered to be risk-free because the “full faith and credit” of the U.S. government backs them.

Which of the following financial assets carries the most risk?

Stocks / Equity Investments include stocks and stock mutual funds. These investments are considered the riskiest of the three major asset classes, but they also offer the greatest potential for high returns.

What concept describes how quickly an investment increases in value?

Compound interest: describes how quickly an interest-bearing asset increases in value.

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What are examples of financial assets?

A financial asset is a liquid asset that gets its value from a contractual right or ownership claim. Cash, stocks, bonds, mutual funds, and bank deposits are all are examples of financial assets.

What is the difference between economic and financial investments quizlet?

What is the difference between economic and financial investments? Financial investments include all purchases undertaken with the expectation of financial gain; economic investments include only purchases of new capital goods. A specific amount of money is more valuable to a person the sooner it is received.

What are the 4 types of financial assets?

a contractual claim to something of value; modern economies have four main types of financial assets: bank deposits, stocks, bonds, and loans. In reality, there are many more types of financial assets (like derivatives, calls, puts, and so on), but you only need to know the basics of these four types for this course.

How do you classify financial assets?

In accordance with IAS 39, financial assets are to be classified in the following four categories: 1. financial assets at fair value through profit or loss; 2. held-to-maturity investments; 3. loans and receivables; 4.

Which of the following is the best example of an investment as defined by economists quizlet?

Which of the following is the best example of an investment as defined by economists? a firm’s producing and putting into inventory goods for future sale.

When shares of stock are sold for more than the price at which they were purchased the difference received by the seller is referred to as quizlet?

loans to governments and corporations. capital gain. When shares of stock are sold for more than they are purchased, the difference received by the seller is referred to as. stock. investment that represents ownership in a corporation.

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Are debt contracts that are issued frequently by corporations?

For example, corporate bonds are debt securities issued by corporations and sold to investors. Investors lend money to the government in return for interest payments (called coupon payments) and a return of their principal upon the bond’s maturity.

Who are the holders of financial asset?

Financial assets represent legal claims to future cash expected often at a defined maturity. The counterparties involved in the agreement are the institution or entity that will pay the future cash (issuer) and the investors. Some examples of financial assets are: stocks, bonds, bank deposits, loans.

Is a car a financial asset?

A vehicle that you own outright is generally an asset. However, a financed vehicle could be considered a debt instead of an asset. A financed vehicle can be considered an asset but only if its value is greater than the amount you owe on it.

Is bank loan a financial asset?

Loans and Receivables are those assets with fixed or determinable payments. For banks, loans are such assets as they sell them to other parties as their business.

What is the difference between economic and financial investments?

The goal of economic investment is to improve a company’s productivity and production efficiency, whereas the purpose of financial investment is to generate or increase financial profit.

What are the two most important factors influencing investor preferences?

What are the two most important factors influencing investor preferences? The desire for high rates of return and dislike of risk and uncertainty.

What is the difference between financial investment and economic investment group of answer choices?

(Consider This) What is the difference between financial investment and economic investment? Financial investment refers to the purchase of assets for financial gain; economic investment refers to the purchase of newly created capital goods.

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