Which of the Following Would Be Classified as Private Investment

question 199

Multiple Choice

Which of the following would be classified as private investment?

• A) An individual's purchase of a used car
• B) A family's purchase of groceries
• C) An individual's purchase of a General Electric bond
• D) A family's purchase of a newly built home
• E) A family's purchase of a new car

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Definitions:

Coupon Bond

A type of bond that pays the holder interest payments at fixed intervals (usually annually or semi-annually) until the bond matures, at which point the principal amount is repaid.

Interest-Rate Risk

The potential for investment losses that result from a change in interest rates, affecting the value of fixed-income securities inversely.

Yield To Maturity

The total return anticipated on a bond if the bond is held until its maturation date, accounting for interest payments and the difference between purchase price and par value.

Coupon Bond

A type of bond that pays the holder a fixed interest rate (coupon) over its lifetime, and the principal is repaid at maturity.