3. Example 0f investment
ïLending business (borrow money to others)
ïPurchase of insurance plan
ïPurchase of bond
ïPurchase of common stock and preferred stock
5. Advantages of investment and
disadvantages
advantages Disadvantages
Save money for future Not all investment guaranteed in profit return
The return can be used for re-invest or keep the
profit
Lose money of your investment
Money grow at good compared to inflation rate Sometimes investment becomes like gambling
6. Differentiate between investment,
speculation and gambling
investment speculation gambling
Rational investment behavior
based in knowledge of past stock
price
Based on hope Make A bet on an uncertain
income
Based on analysis of stock Stock price volatility estimates of
future
Greater risk and disproportionate
to the expected of return
Requires research and research
based on the fact
Price speculation on rumors No analysis before buying shares
Long-term investment are usually
more than two years
Based on an event It itâs a game of chance