Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Introduction to Investments in Securities

Financial Accounting

7. Receivables and Investments

Introduction to Investments in Securities

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Multiple Choice

Which of the following is an advantage of bonds for a potential investor?

They provide regular interest income.

They offer ownership and voting rights in the issuing company.

They have no risk of default.

They guarantee higher returns than stocks in all market conditions.

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Verified step by step guidance

Understand the nature of bonds: Bonds are debt instruments issued by companies or governments to raise capital. Investors lend money to the issuer in exchange for periodic interest payments and the return of the principal amount at maturity.

Analyze the first option: 'They provide regular interest income.' Bonds typically pay interest (known as coupon payments) at regular intervals, making them attractive to investors seeking steady income.

Evaluate the second option: 'They offer ownership and voting rights in the issuing company.' Bonds do not provide ownership or voting rights; these are features of equity investments like stocks.

Assess the third option: 'They have no risk of default.' Bonds carry a risk of default, especially if issued by entities with lower credit ratings. Default risk depends on the issuer's financial health.

Review the fourth option: 'They guarantee higher returns than stocks in all market conditions.' Bonds generally offer lower returns compared to stocks, and their returns are not guaranteed to be higher in all market conditions.