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 statements best explains how the risk level of your investment choices affects your total retirement benefit?

Only government bonds can increase your total retirement benefit, regardless of risk.

Higher-risk investments may offer higher potential returns, which can increase your total retirement benefit, but also come with a greater chance of losses.

Lower-risk investments always guarantee a higher total retirement benefit compared to higher-risk investments.

The risk level of investments has no impact on your total retirement benefit.

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Verified step by step guidance

Understand the concept of risk and return: In financial accounting and investment, risk refers to the uncertainty of returns on an investment. Higher-risk investments typically have the potential for higher returns, but they also carry a greater chance of losses. Lower-risk investments are more stable but may offer lower returns.

Analyze the relationship between risk and retirement benefits: Retirement benefits are influenced by the performance of investments over time. Higher-risk investments, such as stocks, may grow significantly, increasing the total retirement benefit, but they also have the potential to lose value. Lower-risk investments, such as government bonds, are safer but may grow at a slower rate.

Evaluate the statement 'Only government bonds can increase your total retirement benefit, regardless of risk': This is incorrect because other types of investments, including higher-risk ones, can also increase retirement benefits depending on their performance.

Assess the statement 'Lower-risk investments always guarantee a higher total retirement benefit compared to higher-risk investments': This is incorrect because lower-risk investments typically offer lower returns, which may not result in a higher total retirement benefit compared to higher-risk investments with successful performance.

Conclude with the correct explanation: Higher-risk investments may offer higher potential returns, which can increase your total retirement benefit, but they also come with a greater chance of losses. This highlights the trade-off between risk and return in investment decisions.