Question

Choose two of the following investment alternatives. Describe how the factors of safety, risk, income, growth and liquidity affect those investment alternatives:

1.stock

2. bond

Answer 1

1. Equity financing is the process of raising capital through the sale of shares in an enterprise. Equity financing essentially refers to the sale of an ownership interest to Personal Finance raise funds for business purposes. Equity financing is distinct from debt financing,which refers to funds borrowed by a business.

2.Government bonds are a debt security issued by a government to support government spending, most often issued in the country's domestic currency. Government debt is money owed by any level of government and is backed by the full faith of the government. Before investing in government bonds, investors need to assess several risks associated with the country such as country risk, political risk, inflation risk, and interest rate risk.

If there is one overarching theme of investing, it is that risk is directly correlated with reward. You can make a great deal of money investing, but if you are too risky, you can also lose a lot of money. Therefore, you should be careful with how you approach risk. Meanwhile, playing it too safe can result in your investments not doing well at all. A bank savings account may be safe, but at 0.05% interest, you are actually losing money when adjusted for inflation.

Typically, younger investors can afford to play less safely and take a little more danger. Indeed, many investment consultants are encouraging those in their twenties to take more significant hazards than other customers would give. People in their twenties, after all, have time on their side and many years to recover from a mistake. However, this should not be interpreted as a reason for making poor investment choices. However, the older investor would be wise to focus more on safety, leaning towards investments that will minimize risk even if that means that returns won't be so high