There are such types of investments:
◦ 1.1 Business management
◦ 1.2 Economics
◦ 1.3 Finance
◦ 1.4 Personal finance
◦ 1. 5 Real estate
▪ 1.5.1 Residential real estate
▪ 1.5.2 Commercial real estate
The term "investment" is used differently in economics and in finance. Economists refer to a real investment (such as a machine or a house), while financial economists refer to a financial asset, such as money that is put into a bank or the market, which may then be used to buy a real asset.
Business management
The investment decision (also known as capital budgeting) is one of the fundamental decisions of business management: Managers determine the investment value of the assets that a business enterprise has within its control or possession. These assets may be physical (such as buildings or machinery), intangible (such as patents, software, goodwill), or financial (see below). Assets are used to produce streams of revenue that often are associated with particular costs or outflows. All together, the manager must determine whether the net present value of the investment to the enterprise is positive using the marginal cost of capital that is associated with the particular area of business.
In terms of financial assets, these are often marketable securities such as a company stock (an equity investment) or bonds (a debt investment). At times the goal of the investment is for producing future cash flows, while at others it may be for
purposes of gaining access to more assets by establishing control or influence over the operation of a second company (the investee).
Economics
In economics, investment is the production per unit time of goods which are not consumed but are to be used for future production. Examples include tangibles (such as building a railroad or factory) and intangibles (such as a year of schooling or on-the-job training). In measures of national income and output, gross investment (represented by the variable I) is also a component of Gross domestic product (GDP), given in the formula GDP = C + I + G + NX, where C is consumption, G is government spending, and NX is net exports. Thus investment is everything that remains of production after consumption, government spending, and exports are subtracted.
Both non-residential investment (such as factories) and residential investment (new houses) combine to make up I. Net investment deducts depreciation from gross investment. It is the value of the net increase in the capital stock per year.
Investment, as production over a period of time ("per year"), is not capital. The time dimension of investment makes it a flow. By contrast, capital is a stock, that is, an accumulation measurable at a point in time (say December 31st).
Investment is often modeled as a function of Income and Interest rates, given by the relation I = f(Y, r). An increase in income encourages higher investment, whereas a higher interest rate may discourage investment as it becomes more costly to borrow money. Even if a firm chooses to use its own funds in an investment, the interest rate represents an opportunity cost of investing those funds rather than loaning them out for interest.
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Finance
In finance, investment is the buying securities or other monetary or paper (financial) assets in the money markets or capital markets, or in fairly liquid real assets, such as gold, real estate, or collectibles. Valuation is the method for assessing
whether a potential investment is worth its price. Returns on investments will follow the risk-return spectrum.
Types of financial investments include shares, other equity investment, and bonds (including bonds denominated in foreign currencies). These financial assets are then expected to provide income or positive future cash flows, and may increase or decrease in value giving the investor capital gains or losses.
Trades in contingent claims or derivative securities do not necessarily have future positive expected cash flows, and so are not considered assets, or strictly speaking, securities or investments. Nevertheless, since their cash flows are closely related to (or derived from) those of specific securities, they are often studied as or treated as investments.
Investments are often made indirectly through intermediaries, such as banks, mutual funds, pension funds, insurance companies, collective investment schemes, and investment clubs. Though their legal and procedural details differ, an intermediary generally makes an investment using money from many individuals, each of whom receives a claim on the intermediary.
Personal finance
Within personal finance, money used to purchase shares, put in a collective investment scheme or used to buy any asset where there is an element of capital risk is deemed an investment. Saving within personal finance refers to money put aside, normally on a regular basis. This distinction is important, as investment risk can cause a capital loss when an investment is realized, unlike saving(s) where the more limited risk is cash devaluing due to inflation.
In many instances the terms saving and investment are used interchangeably, which confuses this distinction. For example many deposit accounts are labeled as investment accounts by banks for marketing purposes. Whether an asset is a saving(s) or an investment depends on where the money is invested: if it is cash then it is savings, if its value can fluctuate then it is investment.
Real estate
In real estate, investment money is used to purchase property for the purpose of holding or leasing for income and there is an element of capital risk.
Residential real estate
The most common form of real estate investment as it includes property purchased as a primary residence. In many cases the buyer does not have the full purchase price for a property and must engage a lender such as a bank, finance company or private lender. Different countries have their individual normal lending levels, but usually they will fall into the range of 70-90% of the purchase price. Against other types of real estate, residential real estate is the least risky.
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Commercial real estate
Commercial real estate consists of multifamily apartments, office buildings, retail space, hotels and motels, warehouses, and other commercial properties. Due to the higher risk of commercial real estate, loan-to-value ratios allowed by banks and other lenders are lower and often fall in the range of 50-70%.
| PART III | ||
| GLOSSARY | ||
| English-Ukrainian | ||
| A | ||
| ability to borrow | ||
| ability to lend | ||
| absolute amount | ||
| abuse | , | |
| abuse ones economic power | ||
| accept | ||
| accept controls on wages | |
| accept the risks | |
| account | , , , |
| current a. | |
| checking a.. | |
| deposit a. | ; . |
| exchange a. | |
| exchequer a. | |
| 볿 | |
| loss a. | |
| open a. | ; . |
| payable a. | , |
| profit a. | |
| receivable a. | , |
| saving a. | . |
| accountability | , |
| accountant | , |
| accounting | (), , |
| , | |
| account for | |
| accumulate money | |
| advance | , |
| advice | |
| agent | , , |
| collecting a. | ; , |
| avoid the tax | |
| alteration | , |
| annual increase | |
| annual taxable income | , |
| appropriation | , , |
| ; | |
| assess | ; , |
| , | |
| assets | (), , , |
| circulating a. | |
| audit | , , ; |
| independent a. | |
| internal a. | |
| auditor | , |
| average rate | |
| aviso | |
| B | |
| balance | , , |
| trial b. | () |
| bank | |
| commercial b. | |
| investment b. | |
| unit b. | , |
| bank customers | 볺 |
| bank loans | |
| banking | ; |
| ; | |
| retail b. | |
| 볺 | |
| wholesale b. | |
| bankrupt | , |
| bankruptcy | |
| bargain | , , |
| benefits | |
| bearer | , |
| bill | , , , |
| b. of credit | |
| b. of exchange | |
| blank b. | |
| collateral b. | |
| term b. | |
| bonds | |
| bonus | , , |
| book-keeping | |
| double-entry b. | () ; |
| single-entry b. | |
| , | |
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| borrow | |
| breach | () |
| bring benefits | |
| budget | ; |
| budget deficit | |
| business guru | - |
| buyback | |
| buyer | |
| buy securities | |
| buying shares | |
| C | |
| calculate | , |
| cash | , , |
| c. book | |
| c. letter of credit | |
| c. on delivery | |
| c. with order (CWO) | |
| cash reserves | |
| central bank | |
| charge | , , , , , |
| ; v , | |
| , | |
| c. on wages | |
| check | (.) |
| checking account deposits | |
| checking accounts | |
| checking deposit money | - |
| checks drawn on accounts | , |
| cashiers c. | ( |
| ) | |
| certified c. | |
| cheque | (.) |
| claim | |
| coins | |
| codify | , |
| , | |
| commission | , |
| commodity | , , |
| competitor | , |
| concentration of economic power | |
| control prices | |
| control the level deposits | |
| control the money supply | |
| control the price of the labor services | , |
| consumer | , |
| corporate income tax | |
| cost of borrowing | |
| cost of living | |
| cut prices | |
| credibility | , |
| current | , |
| customer | , |
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| D | |
| deal | |
| dealing | pl , |
| () | |
| debenture | , |
| , , | |
| debit | , ; v |
| , | |
| debt | , |
| debtee | |
| debtor | , ; , |
| deduct | , , |
| deflation | |
| demand | , , ; v , |
| demand for higher wages | |
| demand for loans | |
| denomination | , ; , |
| departure | , , |
| deposit | n ,, |
| (),,, | |
| , ; v | |
| , | |
| deposit accounts | |
| depositor | , |
| deposit liabilities | |
| disbursement | ; , |
| dishonoured | , |
| distort | , |
| double-entry | |
| draft | , , ; |
| bank d. | , |
| drawee | (, |
| ) | |
| drawer | |
| direct foreign investment | |
| E | |
| earn a profit | |
| earnings | , ; , |
| retained e. | |
| economic abuses | |
| economic growth | |
| economic protectionism | |
| economic realities | |
| economic recovery | |
| enjoy higher prices | |
| employee | , , |
| employer | , ; |
| endorse | , , |
| endorsee | , (, |
| ) | |
