Review the material in Chapter 2 on "Basic Ideas of Finance."
What are the purposes and uses of assets?
What is the main risk of buying or borrowing capital to invest in an asset?
What financial factors should you consider when deciding to borrow capital?
What are the purposes and uses of assets?
An asset is a resource with financial worth that an individual, organization or nation claims or
controls with the expectation that it will give a future advantage (Barone, 2021). Resources
include: property, vehicles and bank liquidity. Organizations depend essentially on resources for
satisfy their order. Resources are vital in light of the fact that they produce income, increment
business esteem and work with the smooth working of associations. Resources can be utilized to
make abundance, produce income and furthermore decrease costs (Personal Finance course book
by Rachel Siegel and Carol Yacht (n. d). In the event that an individual claims a property, the
person in question might rent it for money.
What is the main risk of buying or borrowing capital to invest in an asset?
Buying or borrowing capital to invest can lead to the creation of wealth, however, we have to
keep that in mind borrowing capital is considered high risk, as it can result in larger capital losses
than your invested capital, as the money must be repaid, no matter how your investment goes.
what financial factors should you consider when deciding to borrow capital?
Some of the factors that can be considered when deciding to borrow capital include the
following;
Interest rate and other charges – When borrowing, the bank or any financial institution adds
certain charges in addition to the amount of principal, such as the prime rate that is regulated by
the central bank, the bank’s additional interest rate, and finance charges. Another important
factor is inflation. All these factors must be taken into account when deciding to borrow capital.
Capital needed – One needs to understand the money needed to borrow and what is the main
purpose of the money being borrowed. One should consider borrowing sources like debenture
etc.
Business size – If the business is large, borrowing from financial institutions can be considered
and if the business is small, borrowing could be a good thing.
Reference:
Barone, A. ( 2021). What is an asset Retrieved
from: https://www.investopedia.com/terms/a/asset.asp
Siegal, R. & Yacht, C. (2009). Personal Finance. Saylor Foundation. Licensed under Creative
Commons CC BY-NC-SA 3.0.
What are the purposes and uses of assets?
What is the main risk of buying or borrowing capital to invest in an asset?
What financial factors should you consider when deciding to borrow capital?
What are the purposes and uses of assets?
An asset is a resource with financial worth that an individual, organization or nation claims or
controls with the expectation that it will give a future advantage (Barone, 2021). Resources
include: property, vehicles and bank liquidity. Organizations depend essentially on resources for
satisfy their order. Resources are vital in light of the fact that they produce income, increment
business esteem and work with the smooth working of associations. Resources can be utilized to
make abundance, produce income and furthermore decrease costs (Personal Finance course book
by Rachel Siegel and Carol Yacht (n. d). In the event that an individual claims a property, the
person in question might rent it for money.
What is the main risk of buying or borrowing capital to invest in an asset?
Buying or borrowing capital to invest can lead to the creation of wealth, however, we have to
keep that in mind borrowing capital is considered high risk, as it can result in larger capital losses
than your invested capital, as the money must be repaid, no matter how your investment goes.
what financial factors should you consider when deciding to borrow capital?
Some of the factors that can be considered when deciding to borrow capital include the
following;
Interest rate and other charges – When borrowing, the bank or any financial institution adds
certain charges in addition to the amount of principal, such as the prime rate that is regulated by
the central bank, the bank’s additional interest rate, and finance charges. Another important
factor is inflation. All these factors must be taken into account when deciding to borrow capital.
Capital needed – One needs to understand the money needed to borrow and what is the main
purpose of the money being borrowed. One should consider borrowing sources like debenture
etc.
Business size – If the business is large, borrowing from financial institutions can be considered
and if the business is small, borrowing could be a good thing.
Reference:
Barone, A. ( 2021). What is an asset Retrieved
from: https://www.investopedia.com/terms/a/asset.asp
Siegal, R. & Yacht, C. (2009). Personal Finance. Saylor Foundation. Licensed under Creative
Commons CC BY-NC-SA 3.0.
