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Financial assets include stocks (equity ownership) and bonds (debt instruments). Stocks represent ownership shares in a company, while bonds are loans that pay interest. Liquidity refers to how easily an asset can be converted to cash without losing value.
Ultimate Flashcard Review
Video
Financial Assets
Key Concepts to Understand
Question 1 of 3
A person's wealth is divided among the following: a savings account, shares of a publicly traded company (stock), and a collection of rare art. Which of the following ranks these assets from MOST liquid to LEAST liquid?
Art collection, company stock, savings account.
Company stock, savings account, art collection.
Savings account, company stock, art collection.
Savings account, art collection, company stock.
Practice Questions: Test Your Understanding
Apply what you've learned with these practice questions. These questions test your understanding of the key concepts.
Question 1 of 3
Which statement best describes a key difference between bonds and stocks?
Bonds represent ownership in a corporation, while stocks represent debt.
Bondholders receive dividend payments, while stockholders receive interest payments.
Stocks generally offer a fixed return, while bond returns fluctuate with company profits.
Bonds represent a loan to an entity (government or corporation), while stocks represent partial ownership.
Selling bonds increases a company's equity, while issuing stock increases its liabilities.
Key Takeaways
- 📊Master the fundamentals: Understanding these core concepts is essential for success in AP Economics.
- ✅Practice makes perfect: Use the interactive exercises and practice questions to reinforce your understanding.