investments paper 09-05

investments paper 09-05 - MGT 3440 Summary questions from...

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MGT 3440 Summary questions from Chapter One (problems 1, 3, and 5) 1. Explain the difference between saving and investing. Saving is considered to be putting money away into a situation that involves little or no risk. Most people think of a savings account, CD account, or something that is secure and/or FDIC insured. Investing is also putting money away, but in a different approach and usually into something much riskier. Buying shares of a corporation on the NYSE, purchasing a bond or security from a company would also be good examples of investing. Most assume a rate of return, but have the ability to lose some or all of its value. 2. Distinguish between a financial asset and a real asset. A financial asset has a liability attached to it somewhere. If I were to buy a government bond, the bond is recognized as an asset to me, but also has a corresponding liability to the government, and would appear as a liability on their balance sheet. A real asset is something that has no liability attached to it. A good example for a real asset is
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