Investment Instruments and Valuation Quiz

Investment instruments aim to generate financial gains over time.

Bonds represent loans made by investors to entities, typically governments or corporations.

NPV calculates the present value of future cash flows, helping determine the profitability of an investment.

Market capitalization is a key factor in determining a stock's value, based on the total market value of its outstanding shares.

Stocks confer ownership rights in a corporation, while bonds represent loans to a corporation or government entity.

Options derive their value from an underlying asset and can be used for hedging or speculation.

Dividends are periodic payments made by companies to shareholders, providing income and potentially signaling financial health.

Investors often accept greater risk in pursuit of higher potential returns.

The concept that the value of money changes over time due to factors such as inflation and opportunity cost.

CCA involves comparing the financial metrics of similar properties to determine their value.

The theory that asset prices incorporate all available information, making it impossible to consistently outperform the market.

CAPM helps investors assess the risk and expected return of an investment by considering its sensitivity to market risk.