Investments
Individuals, companies, and governments all invest money, hoping that the investment will earn them more money. Investments may be large sums of money, or they may be quite modest. Stocks, bonds, and real estate are examples of investments. Depositing any amount in a savings account that pays some rate of interest is an investment. Investments may be relatively safe, as in the savings account example, or they may be risky. As a general rule, risky investments have potential for greater rewardsbut also for greater losses.
Pig House Investment Reaps Large Profits
NEW YORKJohn Rumpole announced today that his investment of $5 million in a company that manufactures shelters for pigs has made a sizable profit. "The return on this investment has been much greater than expected," commented Rumpole. "Due to an extremely harsh winter in the key pig farming regions of the world, the shelters were in very high demand. Business was excellent!"In addition to the pig houses, eccentric Rumpole's portfolio includes investments in Alaskan icebergs, stock in a tapioca company, stock in a deep-sea shipwreck recovery company, and agate mines in Colorado. |
WHAT DO YOU KNOW?
Circle T or F to indicate whether each of the following statements is true or false.| Q1 |
T |
F |
1. People usually invest money with the hope or expectation that it will result in more money. |
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A1:
| True. An investment is usually made to reap some profit. |
| Q2 |
T |
F |
2. A return on an investment means that the investment was rejected and sent back to the investor. |
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A2:
| False. A return on an investment is the profit made on it. Often the return on an investment is expressed as an annual percentage rate. |
| Q3 |
T |
F |
3. All the investments of a person or company or government taken together are called a briefcase. |
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A3:
| False. The combined investments held by a person, company, or government are called a portfolio. |
| Q4 |
T |
F |
4. Rumpole should not have invested in shelters for pigs. This was a bad investment. |
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A4:
| False. Rumpole's investment in the pig shelters made money for Rumpole. The return on the investment was good. |
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TERMS RELATED TO INVESTMENTS
investment
the outlay of money usually for income or profitreturn on investment
the income or profit made on an investment; often called ROI for shortportfolio
combined holdings of stocks, bonds, commodities, real estate, and other investments |
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