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 about investing in securities is false?

Debt securities such as bonds typically pay interest to investors.

Investments in equity securities can provide both dividend income and potential capital gains.

Investors may classify securities as trading, available-for-sale, or held-to-maturity.

All investments in securities are guaranteed to generate positive returns.

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Verified step by step guidance

Step 1: Understand the types of securities mentioned in the problem. Debt securities, such as bonds, typically pay interest to investors. Equity securities, such as stocks, can provide dividend income and potential capital gains. These are common characteristics of these types of investments.

Step 2: Review the classification of securities. Investors may classify securities into three categories: trading (short-term investments for profit), available-for-sale (investments held for an indefinite period), and held-to-maturity (debt securities intended to be held until maturity). These classifications are based on the investor's intent and accounting standards.

Step 3: Analyze the statement 'All investments in securities are guaranteed to generate positive returns.' This statement is false because investments in securities carry risks, including market risk, credit risk, and interest rate risk. Returns are not guaranteed and can be negative depending on market conditions and other factors.

Step 4: Compare the false statement with the other statements provided. The other statements accurately describe characteristics of debt securities, equity securities, and the classification of securities, making them true.

Step 5: Conclude that the false statement is 'All investments in securities are guaranteed to generate positive returns,' as it contradicts the fundamental principle of investment risk.