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 is the key to designing your investment portfolio?

Ignoring your risk tolerance

Focusing solely on short-term gains

Diversification of assets

Investing only in a single security

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Verified step by step guidance

Understand the concept of diversification: Diversification involves spreading investments across various asset classes, industries, or geographic regions to reduce risk. This ensures that the performance of one investment does not overly impact the overall portfolio.

Evaluate the importance of risk tolerance: Risk tolerance refers to an investor's ability and willingness to endure fluctuations in the value of their investments. Ignoring risk tolerance can lead to poor investment decisions that do not align with the investor's financial goals or comfort level.

Recognize the drawbacks of focusing solely on short-term gains: While short-term gains can be appealing, they often involve higher risk and may not align with long-term financial objectives. A balanced approach is typically more sustainable.

Understand the risks of investing in a single security: Concentrating investments in one security exposes the portfolio to significant risk if that security performs poorly. Diversification mitigates this risk by spreading investments across multiple securities.

Apply the principle of diversification to portfolio design: When designing an investment portfolio, prioritize diversification by including a mix of asset types (e.g., stocks, bonds, real estate) and considering factors such as risk tolerance, investment goals, and time horizon.