-Definition: Portfolio investment consists of foreign purchases of stocks (equity), bonds, certificates of deposit, and commercial paper.
What is meant by portfolio investment?
A portfolio investment is ownership of a stock, bond, or other financial asset with the expectation that it will earn a return or grow in value over time, or both. It entails passive or hands-off ownership of assets as opposed to direct investment, which would involve an active management role.
What are investments quizlet?
Investment. The act of redirecting resources from being consumed today so that they may create benefits in the future; the use of assets to earn income or profit. Financial System. The system that allows the transfer of money between the savers and borrowers. You just studied 11 terms!
What is the purpose of portfolio investment?
An investment portfolio is a basket of assets that can hold stocks, bonds, cash and more. Investors aim for a return by mixing these securities in a way that reflects their risk tolerance and financial goals.
What is a portfolio quizlet?
Portfolios. A collection of Assets (each asset will have its own level of potential risk and reward)
What are the 3 types of portfolio?
Types of Portfolio Investment
- The Aggressive Portfolio. Aptly named, an aggressive portfolio is aggressive because it aims for higher returns and often undertakes higher risks to achieve this objective. …
- The Defensive Portfolio. …
- The Income Portfolio. …
- The Speculative Portfolio. …
- The Hybrid Portfolio.
What is portfolio and example?
The definition of a portfolio is a flat case used for carrying loose sheets of paper or a combination of investments or samples of completed works. An example of portfolio is a briefcase. An example of portfolio is an individual’s various investments. An example of portfolio is an artist’s display of past works.
How does investment help the economy quizlet?
Investment promote financial growth by adding money into the economy which is then spent on goods and services to provide the goods and services.
What is an example of a high risk investment?
Crypto assets include cryptocurrencies, blockchain companies, cryptocurrency funds, and initial coin offerings (ICOs). In recent years, certain crypto assets have generated a lot of interest from investors and the financial media. These products are considered high-risk because of their speculative nature.
What is the purpose of investing quizlet?
The purpose of investing is to buy assets with the goal of adding additional income, and portfolio diversification is for Creating a collection of investments that will provide an acceptable return with an acceptable exposure to risk.
What is portfolio investment with example?
Portfolio investments are investments in the form of a group (portfolio) of assets, including transactions in equity, securities, such as common stock, and debt securities, such as banknotes, bonds, and debentures.
What is the expected return on the portfolio quizlet?
The expected return on a portfolio is the weighted average of the expected returns on the securities that the portfolio involves. The weight of each security is the fraction of wealth invested in that security. Suppose that the expected return on Microsoft is 12%, whereas the expected return on Coca-Cola is 10%.
Why do you diversify your portfolio?
Diversification can help an investor manage risk and reduce the volatility of an asset’s price movements. … You can reduce the risk associated with individual stocks, but general market risks affect nearly every stock and so it is also important to diversify among different asset classes.