Key Features
What is a stock market?
A stock exchange
What is a risk associated with financial instruments?
Market risk, Interest rate risk and currency risk
What is inflation?
Rate of increase in prices over time
What are some advantages of treasury bills?
Safety & security, short-term investments, liquidity and no state and local taxes
What are some disadvantages of t-bills?
Low returns, interest rate risk & opportunity
What are treasury bills
Short-term investments
What is revenue growth?
Increase in revenue over a period of time
What do rising interest rates do to inflation?
Curb inflation
Why are t-bills considered safe?
They are backed by the U.S government
Why do t-bills usually earn less money than other investments?
Low returns
How are stock markets used by companies when involving treasury bills?
To raise capital
What is a return of an investment?
A gain made by an investor
What do declining interest rates do to inflation?
Speed inflation
How is liquidity involved in t-bills?
Its easy to convert to cash without losing value
Why might the value of t-bills go down when interest rates go up
Interest rate risk
How can speculation affect profits in the stock market?
It involves taking calculated risks to seek opportunities
Factors that can influence the return of an investment?
Revenue growth, profitability and competitive advantage
What is an example of market factors?
Labor & capital
How can short-term investments be involved in t-bills
T-bills usually have short maturities
What is an opportunity cost of t-bills?
Investing in t-bills might mean missing out on other investments that make you more money
How are stock markets used by investors when involving treasury bills?
To search for returns
What is the risk of a return on investment?
Chance or odds that an investor is going to lose money
What is a market factor of t-bills?
Interest rates
How are state & local taxes involved with t-bills
Interest earned from t-bills isnt taxed by local or stated governments
What is another disadvantage of a t-bill?
Limited growth potential