Fnce
What is the potential return on a investment related to
Should be directly related to the potential risk a investor assumes
What is risk tolerance?
Risk tolerance is the amount of psychological pain you are willing to suffer for your invvestments
What risks are associated with investing?
Losing all or part of your principle, the purchasing power of your investment can decerase and you may not recieve the return that you expected.
Associated Risk #1 Business Failure Risk
The business will be less profitable then anticipated
Associated Risks #2 Iflation Risk
The return on the investment will not keep up with inflation
Associated Risks #3 Intrest Rate Risk
Changes in the intrest rates within the economy
Associated Risks #4 Market Risks
The value fluctuates because of behavior of investors in the marketplace
Associated Risks #5 Global Investment Risk
Should be evaluated like domestic investments
What are the 5 associated risks?
Business Failiure Risk, Inflation Risk, Intrest Rate risk, Market Risk, Global Investment risk
What is the safe investment that starts with s
Savings account
What is the safe investment that starts with G
Government Saving bonds, Guranteed Investment Certificates (GICS)
What is the safe investment that starts with C
Canadian Treasury Bills
What is the safe investment that starts with t
Term deposits
How is equity capital provided?
It is provided by stockholders who buy shares of a company stock
Who are stockholders?
Stockholders are owners and share in the success of the company
What is a bond?
A bond is a loan to a corporation, the federal governemnt or municipality
How do bondholders recieve payments
Boldholders recieve periodic intrest payments. The principle they lend is repaid at maturity 1-30 years
What can bondholders do with the bond
They can keep it until maturity or sell it to another investor
Who is investores money ivnvested by?
A proffesional fund manager
How can you invest in real estate
You can invest in a real estate investment trust REIT. A REIT is issued in the stock market and is designed to pay out money generated from a business or a set of investments through cash disbursements to unitholders.