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 best describes a key difference between investing in an individual bond and a bond fund?

Bond funds guarantee the return of principal at maturity, while individual bonds do not.

Individual bonds are always less risky than bond funds.

Bond funds pay interest only at maturity, while individual bonds pay interest periodically.

An individual bond provides a fixed maturity date, while a bond fund does not have a set maturity date.

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Verified step by step guidance

Understand the concept of individual bonds: Individual bonds are debt securities issued by entities like corporations or governments. They have a fixed maturity date, meaning the principal amount is returned to the investor at the end of the bond's term.

Understand the concept of bond funds: Bond funds are investment vehicles that pool money from multiple investors to invest in a diversified portfolio of bonds. Unlike individual bonds, bond funds do not have a fixed maturity date because they continuously buy and sell bonds within the fund.

Compare the key difference: The primary distinction lies in the maturity structure. Individual bonds have a fixed maturity date, providing a clear timeline for when the principal will be repaid. Bond funds, on the other hand, do not have a set maturity date, as they are designed to be ongoing investments.

Clarify misconceptions: Bond funds do not guarantee the return of principal at maturity because they lack a fixed maturity date. Additionally, bond funds typically pay interest periodically, not only at maturity, similar to individual bonds.

Summarize the correct answer: The key difference is that an individual bond provides a fixed maturity date, while a bond fund does not have a set maturity date.