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

How might fiscally responsible individuals use investments in securities to meet their financial goals?

By keeping all their savings in a non-interest-bearing checking account.

By allocating funds to a diversified portfolio to achieve long-term growth and manage risk.

By investing only in high-risk securities to maximize short-term profits.

By avoiding all forms of investment to eliminate any possibility of loss.

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Verified step by step guidance

Understand the concept of investments in securities: Securities are financial instruments such as stocks, bonds, and mutual funds that individuals can purchase to grow their wealth over time. They are used to achieve financial goals like retirement savings, education funding, or wealth accumulation.

Recognize the importance of diversification: Diversification involves spreading investments across different types of securities and industries to reduce risk. This strategy helps balance potential losses in one area with gains in another, ensuring more stable long-term growth.

Evaluate the role of risk management: Fiscally responsible individuals assess their risk tolerance and allocate funds accordingly. They avoid concentrating all their investments in high-risk securities, as this could lead to significant losses. Instead, they aim for a mix of low-risk and moderate-risk investments to achieve steady returns.

Understand the drawbacks of non-investment strategies: Keeping all savings in a non-interest-bearing checking account or avoiding investments entirely can lead to missed opportunities for growth. Inflation can erode the value of money over time, making it essential to invest in assets that can outpace inflation.

Learn the benefits of a diversified portfolio: By allocating funds to a diversified portfolio, individuals can achieve long-term financial growth while managing risk effectively. This approach aligns with the principles of fiscal responsibility and helps meet financial goals sustainably.