Which Would Be Considered an Investment According to Economists

question 112

Multiple Choice

Which would be considered an investment according to economists?

• A)the purchase of newly-issued shares of stock in Microsoft
• B)the construction of a new computer chip factory by Intel
• C)the purchase of shares of stock by Fidelity, a mutual fund company
• D)the sale of government bonds by the nation's central bank

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Definitions:

Maturity

The date on which a financial instrument (e.g., bond, loan) reaches its final installment, and the principal is due to be paid to investors.

Expectations Theory

A theory related to interest rates stating that the long-term interest rates are geometric averages of present and future short-term interest rates, reflecting market assumptions about future rates.

Forward Rate

The agreed-upon interest rate for a financial transaction that will occur at a future date, often used in the context of foreign exchange or interest rates.

Zero-Coupon Bonds

Bonds that do not pay periodic interest, instead being sold at a discount and maturing at face value, offering a profit at redemption.