MGMT 4A Lecture Notes - Lecture 4: High-Yield Debt, Compound Interest, Market Liquidity
Document Summary
Saving seeks to protect money from loss. Put in a vault, or low risk investment. When investing, you risk more for a greater return or reward. The more risk you are willing to take on as an investor, the higher your reward should be. Your ultimate risk: you may lose some or all of your capital goods. It is better to invest in government bonds rather than corporate bonds. Corporate bonds usually have a higher interest rate to attract buyers. Likewise, start up stocks are riskier than blue chips, have higher potential. Risks come in many forms depending on what you invest in. Example: buy a house to flip it but the market crashes before you can sell. Buy gold bars or gold stock instruments to bet gold will increase in value. But after you but, the economy goes into a downturn and gold prices go down. Your ,000 gold bug investment may be sliced in half!
