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Unformatted text preview: 2 Copyright, 2005 7 Original purchase price: $125,000 Sale price: Brokerage fee: Closing costs: $195,000- 12,000- 8,500 Orig. purchase price: - 125,000 $49,500 Copyright, 2005 8 Investment Terminology Appreciation Equity The difference between the sale price (or current market value) and all mortgage debts An investor’s capital (cash) investment! An increase in value above and beyond the effect of any physical improvements Copyright, 2005 9 Investment Terminology Liquidity The ability to sell an asset quickly for market value Stocks/Bonds Real estate Copyright, 2005 10 Investment Terminology Risk Tax shelter The possibility that actual outcomes will vary from what was expected when the asset was purchased A legal method by which to reduce or avoid tax liabilities Copyright, 2005 11 End of Lecture At the conclusion of this lecture, complete Quiz 17-1 in the course....
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- Spring '08