Investment Objectives
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each of the black spaces below before clicking
on it to display the answer.
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| Growth (Investment consideration) | An increase in invested capital, primarily generated through dividends or interest payments.
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| Income, (Investment consideration) | Regular production of cash from investments, through dividend or interest payments.
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| Total return (growth & income), (Investment consideration) | A combination of growth, capital growth and income, but less of each than an investment that focuses on just one of those objectives.
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| Total return (growth & income)(Investment Application) | Dividend-producing stocks, such as blue chips, are one way to go after this objective. Another strategy is a portfolio including some growth securities and some income securities.
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| Preservation of capital (Investment consideration) | Safety of principal is paramount, in return for which investor accepts lower returns.
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| Growth (Investment Application) | Equity securities are usually used in pursuit of this goal.
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| Income, (Investment application) | Bonds and preferred stocks are often used to produce income
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| Preservation of capital (Investment application) | Money market instruments and money market mutual funds are the main tools in this area.
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| Tax reduction (Investment consideration) | High-bracket investors facing a big tax bite on taxable investments may find tax-exempt vehicles produce a better after tax return
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| Tax reduction (Investment application) | Municipal bonds are thy primary investment for tax reduction, although tax-deferral may also help these investors.
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| Speculation (Investment consideration) | Some investors are willing and able to take considerable risks for the chance to hit a big financial home run.
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| Speculation (Investment application) | Small-cap stocks and even penny stocks are aggressive growth vehicles.
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| Liquidity (Investment consideration) | This is a primary need for those who may need cash quickly. It is the ability to easily turn an investment into cash without a big impact on the market for the security.
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| Liquidity (Investment application) | Liquidity often goes hand-in-
hand w/preservation of capital, but they aren't the same thing. example, 10 year T-notes are very liquid, but their prices are affected by interest rate swings, meaning they aren't the best vehicle for capital preservation
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| Liquidity (Investment application) cont | An FDIC-insured long-term bank CD is very good at preserving capital, but the investor may lose some interest by liquidating early.
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Created by:
coderman
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