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 type of investment is best known for having low risk and low liquidity?

Money Market Funds

Certificates of Deposit (CDs)

Common Stocks

Treasury Bills

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Verified step by step guidance

Understand the concept of risk and liquidity in investments: Risk refers to the potential for loss in value, while liquidity refers to how quickly an investment can be converted into cash without significant loss in value.

Analyze the characteristics of Certificates of Deposit (CDs): CDs are low-risk investments because they are typically insured by the Federal Deposit Insurance Corporation (FDIC) up to a certain limit. They also have low liquidity because they require the investor to lock in their money for a fixed term, and early withdrawal may result in penalties.

Compare the characteristics of other investment options: Money Market Funds are relatively low-risk but have higher liquidity compared to CDs. Common Stocks are high-risk investments due to market volatility, but they are highly liquid. Treasury Bills are low-risk and have higher liquidity than CDs because they are short-term government securities.

Identify the investment type that matches the criteria of low risk and low liquidity: Based on the analysis, Certificates of Deposit (CDs) are best known for having low risk and low liquidity.

Conclude that understanding the risk and liquidity profile of investments is essential for making informed financial decisions, especially when prioritizing safety and stability over accessibility.