Learn: Investment test 1

Real Assets

Assets that produce goods and services (land, buildings, machinery, intellectual property).

Financial Assets

Claims on income generated by real assets (stocks and bonds).

Real Assets vs. Financial Assets

Real assets produce wealth; financial assets represent claims on wealth.

Debt Security

A financial asset that promises fixed payments to investors.

Equity

A financial asset representing ownership in a company.

Derivative Security

A security whose value depends on another asset's value.

Money Market

A market for short-term (less than 1 year), liquid, low-risk securities.

Capital Market

A market for long-term (more than 1 year), riskier securities.

Treasury Bill (T-Bill)

Short-term debt issued by the U.S. government.

Commercial Paper

Short-term unsecured debt issued by corporations.

Stock =

Equity

Bond =

Debt

Real assets create?

Wealth

Financial assets are

claims on wealth