ACCT 301 Investments ASSIGNEMENT.pdf

Investments

Investments

Rachel Wills

ACCT 301

Prof. Kouri Hastings

Liberty University

Investments

The word investment can be defined as the act of committing money or capital to an

endeavor (a business, project, real estate, etc.), with the exception of obtaining an additional

income or profit. Simply searching the definition of investment give you three different versions

company.” (Chen, James 2018) This includes financial profit, interest earnings, or the

appreciation of the asset. For example, a corporation’s shareholders will receive cash from their

investment through the ultimate sale of the ownership shares of stock.

The history of investing dates all the way back to 1792, when the New York Stock

Exchange (NYSE) first opened. The NYSE remains one of the world’s leading public market

exchanges, alongside of NYSE is NASDAQ, AMEX, and others. The banks that dominate the

investing world didn’t begin until the 1800s, this includes Goldman Sachs and J.P. Morgan. In

the 1900s, the term investing was more intertwined with trading and speculating. The most well-

known and successful value investor is Warren Buffet, CEO of Berkshire Hathaway. Warren

Buffet is also a renowned philanthropist and one of the world’s richest people by financial assets.

Investments

assertion has suffered from noteworthy data boundaries. Precisely, it has generally relied on

either moderately detailed data on a small subset of total business guideline or broad proxy

measures aiming to capture total business guideline typically with little-if any-disaggregation

“First, under the regulatory capture perspective regulating bodies can be captured by industry

interests and used to promote the goals of incumbent firms.” (Tullock 1967; Stigler 1971)

“Investment is a central macroeconomic variable. It’s fluctuations account for a large

fraction of the cyclical volatility of output and input, and most economists link high rates of

investment to long-run economic growth.” (Gomes, 2001) Andrew Abel stated that

understanding investment behavior was proven to be a very difficult task, however this was said

in 1980 when technology was first starting out. Now investing is much easier because

technology has come a long way and is much easier to use.

Investing refers to a long-term commitment, unlike trading or speculating, which is short-

term and often deals with heavy turnover and, consequently, a higher amount of risk. Investing

Investments

There are different ways to make an investment. You can do so at a bank, with a broker,

or with an insurance company. One can invest directly – via an angel or seed investment in a

startup venture as well as several other forms. An angel is an investor who invests in small

on the portion of the larger investment in some cases. Brokers can handle orders for many public

company stocks in exchange for a fee or commission.

There are different types of investments. One of these types is a fixed income investment,

this refers to an opportunity that brings in a set amount of interest income on a regular basis,

such as a bond or preferred share of a company. Investments can also take on the form of

common equity stakes. Both preferred and common company shares are forms of corporate

ownership in publicly traded companies. In private equity, forms on investment also include

equity stakes; although, these stakes are not traded on a public exchange.

There are some accounting practices that appear to be generated by a desire to be

conservative. “For example, companies are required to recognize losses for declines in the value

Investments

trigger debt covenants that allow creditors to protect themselves from bad management.” Despite

the lack of support for conservatism in the conceptual framework, it is more likely to persist as

an important consideration in accounting practice and in the application of some accounting

Liquid investments can be defined as an investment that can easily be converted into cash

without having a significant impact on its value. However, liquid investments that are not

classified as cash equivalents are reported as short-term investments. Short-term investments are

investments that are not classified as cash equivalents that will be liquidated in the coming year

or operating cycle, whichever ends up being longer. They are also called temporary investments

or short-term marketable securities. If a company has the ability to invest in stock and debt

securities, then other corporations are included as short-term investments.

“Firms do not always have an opportunity to delay investments. There can be occasions,

for example, in which strategic considerations make it imperative for a form to invest quickly

and thereby preempt investment by existing or potential competitors. But in most cases delay is

Investments

and therefore the theoretical foundation of standard neoclassical investment models. The reason

for this is that a firm that has an opportunity to invest is holding an option. It has the right but not

the obligation to buy an asset at some future time of its choosing. “As a consequence, option

avoid investing in projects that have a negative net present value. Like any financial option, the

option itself has some non-negative value.

There are some companies who occasionally acquire assets that are used indirectly in the

operations of the business. These assets include investments in equity and debt securities of other

corporations. This also includes land held for speculation, long-term receivables, and cash set

aside for special purposes. For example, such as for future plant expansion. “Investments are

assets not used directly in operations.” Alongside investments, there are other long-term assets

such as: property, plant, and equipment, intangible assets, and other long-term assets.

In India, taxpayers’ decisions are being affected in saving tax by investing in tax saving

bonds. “While enabling oneself eligible for deduction from the partial or total tax liabilities,

Investments

India, are considering investing in a financial instrument as a very critical decision when it

comes to the risks in their investments.

Tax saving bonds, also known as TSBs, in India are being proposed as an investment to

This limit is above the current income tax section 80C limit (of INR 100,000/-) for tax- exempt

benefits by investing into notified instruments” (Kumar & Anand, 2014) This act would help the

taxpayers of India tremendously. The main purpose of this new sections in the budget was to

promote infrastructure development in the country. The government of India proposed that the

new savings made by subscribing these bonds are to be utilized for infrastructure financing

purposes. This happened because there was a growing demand and need for better infrastructures

in the country. This helps us see how important investments are.

“What determines whether policy environments attract or deter investment? For

investors who seek predictable environments, the state is a double-edged sword. On one hand,

states’ involvement in economic affairs is commonly justified as a way to increase the

Investments

costs of measurement and enforcement. Nonetheless, the state is controlled by leaders who are

responding to political incentives, which can make it difficult for economic actors to predict

changes that could affect their business interests, this includes potential investments.

The Bible talks about investments. In Ecclesiastes 11:1-6, “Send your grain across the

seas, and in time, profits will flow back to you. But divide your investments among many places,

for you do not know what risks might lie ahead. When clouds are heavy, the rain comes down.

Whether a tree falls norths or south, it stays where it falls. Farmers who wait for perfect weather

never plant. If they watch every cloud, they never harvest. Just as you cannot understand the path

of the wind or the mystery of a tiny baby growing in its mother’s womb, so you cannot

understand the activity of God, who does all things. Plant your seed in the morning and keep

busy all afternoon, for you don’t know if profit will come from one activity or another – or

maybe both.” (NLT) I believe that this verse is talking about how we don’t always know if an

investment is going to be good or bad. But that we should always look at other things to invest

Investments

When researching verses that talk about investing, almost all of them talk about how we

should invest our time into things. For example, Luke 12:33-34 “Sell your possessions, and give

to the needy. Provide yourselves with money bags that do not grow old, with a treasure in the

to invest ourselves and give unto others. God truly wants us to invest our time, and sometimes

money, into things that help others who are in need.

In conclusion, investments are everywhere. Whether you’re talking about investing into a

business, investing in stocks, or investing your time into something. If you truly think about it,

you start investing your time from the beginning of your life. You slowly start to invest your time

and energy into school, and after that is done you invest your time into a job. There are so many

studies that talk about whether investing into one thing is better than investing into another. For

example, in a paper written by John Weche he showed how green corporate investments crowd

out other business investments. “Empirical studies on the link between green investment and

other business investment at the firm level either focus on innovation-specific types of