Powerpointclass assignment 3 - motion paths
- 1. Robert Gray Assignment #3 – Activity 3 MOTION PATHS
- 2. The Flow of Savings and Investments Financial Institutions that Savers make make loans to…. Investors deposits to…. • Commercial Banks • Saving and Loan institutions • Savings Banks • Mutual Savings Banks • Credit Unions • Life Insurance companies • Pensions Funds • Finance Companies Investment promotes growth and contributes to our nations wealth
- 3. Risk, Liquidity and Return Types of Risk: 1. Credit Risk – borrower may not pay back the loan. This is the main risk banks face when lending out money. 2. Liquidity Risk – one may not be able to convert that investment to cash as quickly as they may like. (example – Time deposit) 3. Inflation Rate Risk – Investment where the inflation rate erodes the value of the investment/asset. 4. Time Risk – idea where an investment has tied up an investors money and they cannot take advantage of a better opportunity.
- 4. Junk Bonds: a lower rated, potentially higher-paying bond. • Popular during the 1980’s and 1990’s. • Generally appealing to aggressive investors. • Ratings of junk bonds are low rated.
- 5. Two ways to make money or benefit from buying stock 1. Dividends: portion of the company’s profits that are paid to the shareholders. 2. Capital Gains: selling stock for more than you originally paid for it. If an investor can sell their stock for a profit, it is called a capital gain. If they sell it for a loss, it is called a capital loss.
- 6. Measuring Performance in the Stock Market Bull Market – a steady rise in the stock market over an extended period of time. Bear Market – a steady drop in the stock market over an extended period of time. Dow Jones Industrial Average – represents 30 large companies in various industries such as food, entertainment, and technology S & P 500 – gives a broad picture of how the stock market is doing. It tracks 500 companies to measure the overall stock performance.