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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following statements about investments and risk is true?

Higher potential returns on investments are generally associated with higher levels of risk.

Investments in government bonds always carry more risk than stocks.

Risk can be completely eliminated by diversifying a portfolio.

All investments guarantee a fixed return regardless of risk.

Previous problemNext problem

Verified step by step guidance

Understand the concept of risk and return: In financial accounting and investing, risk refers to the uncertainty of achieving expected returns. Higher potential returns are typically associated with higher levels of risk because investors demand greater compensation for taking on more uncertainty.

Evaluate the statement 'Higher potential returns on investments are generally associated with higher levels of risk': This is a fundamental principle in finance known as the risk-return tradeoff. It is generally true that investments with higher expected returns, such as stocks, carry higher risk compared to safer investments like government bonds.

Analyze the statement 'Investments in government bonds always carry more risk than stocks': Government bonds are typically considered low-risk investments because they are backed by the government. Stocks, on the other hand, are subject to market fluctuations and are generally riskier than government bonds. This statement is false.

Examine the statement 'Risk can be completely eliminated by diversifying a portfolio': Diversification reduces risk by spreading investments across different assets, but it cannot completely eliminate risk. Systematic risk, which affects the entire market, cannot be diversified away. This statement is false.

Review the statement 'All investments guarantee a fixed return regardless of risk': Investments do not guarantee fixed returns, as returns depend on the type of investment and associated risks. For example, stocks and mutual funds have variable returns based on market performance. This statement is false.