Investment basics
What is an investment?
Putting money into something to earn money in the future
What is debt financing?
Borrowing money to finance investments, which must be repaid with interest.
What is risk in investing?
The chance that you might lose money on an investment.
What is debt?
Money borrowed that must be paid back with interest.
What is cash?
Physical money or funds that a business can use immediately.
What are tangible assets?
Physical assets like machinery, buildings, and equipment.
What is equity financing?
Raising money by selling shares of the company, giving up ownership in exchange for cash.
What is reward in investing?
The money you make when an investment is successful.
What is equity financing?
Selling shares of your company to raise money.
What is cash flow?
The movement of money in and out of a business.
What is a short-term investment?
An investment that is expected to make money quickly, usually within a year.
What is the main advantage of debt financing?
Interest payments on debt are tax-deductible.
Why do low-risk investments usually offer lower returns?
Low-risk investments are safer, meaning there is less chance of losing money, but this also means they offer smaller rewards compared to riskier investments.
What is a loan payment?
Money you must pay regularly to repay a loan.
Why is cash important?
A business needs cash to pay bills, employees, and buy supplies.
What is a long-term investment?
An investment that takes several years to make money, like buying property or starting a company.
Why do companies need financing?
To buy equipment, pay employees, and grow their business.
How can you reduce the risk of losing money on investments?
By diversifying your investments, which means spreading your money across different types of assets.
Why is debt risky?
If the business can’t pay back the loan, it may go bankrupt.
What is working capital?
Money available to meet day-to-day expenses of a business.
Why do companies invest?
To grow their business, make more money, and stay competitive.
What is the difference between debt and equity?
Debt is borrowed money that must be repaid, while equity is selling part of the company.
Name a high-risk investment
Cryptocurrencies, new company, hedge funds, currency trading, dividend stocks, crowdfunding.
What is the benefit of equity?
You don’t have to pay it back, but you give up some ownership.
What happens if a company runs out of cash?
It may not be able to pay its bills and could go out of business.