IFIC Unit 5: Types of Investments with
verified solutions rated A+ passed
Describe the concept of a mutual fund
Mutual funds are investments that hold a collection of different securities such as equities and bonds
Explain safety of principal as an investment objective
Strives to protect investors from losing any of the original investment
Explain Income as an investment objective
Strives to provide investors with a regular source of income over the course of their investment time
horizon.
Explain Growth as an investment objective
Strives to provide appreciation over time.
Why does the Government issue securities?
in order to raise money for spending commitments
Short term: 5 years or less. T-bills, or provincial/municipal short-term papers
Medium term: 5-10 years. Provincial/municipal bonds
Long-term: 10 years plus. Fixed income securities Ex. Gov of Canada bonds.
, Why do Corporations issue securities?
to raise money to grow their businesses by dividing ownership into smaller parts and sell those parts to
the public in the form of shares.
Describe the characteristics of fixed income securities
Essentially loans provided by investors.
Term-to-maturity: the length of time between the current date and maturity date
Term: short-within 5 years, medium- 5-10 years, longterm-10 years or longer
Par value: the original principal investment
Coupon rate: used to calculate the regular interest payments paid by a bond
Describe the major features of Treasury bills
fixed income securities issued by the Canadian government to finance short term cash needs.
Sold at a discount and then the government pays the investor the face value at maturity. The difference
is interest income.
Very low risk.
Objective: safety of principal and income
Describe the major features of provincial and municipal short term papers
Debt securities issued bu the provincial or municipal government in order to raise money to pay for
capital spending.
Sold at a discount and pay the face value at maturity (like t-bills)
verified solutions rated A+ passed
Describe the concept of a mutual fund
Mutual funds are investments that hold a collection of different securities such as equities and bonds
Explain safety of principal as an investment objective
Strives to protect investors from losing any of the original investment
Explain Income as an investment objective
Strives to provide investors with a regular source of income over the course of their investment time
horizon.
Explain Growth as an investment objective
Strives to provide appreciation over time.
Why does the Government issue securities?
in order to raise money for spending commitments
Short term: 5 years or less. T-bills, or provincial/municipal short-term papers
Medium term: 5-10 years. Provincial/municipal bonds
Long-term: 10 years plus. Fixed income securities Ex. Gov of Canada bonds.
, Why do Corporations issue securities?
to raise money to grow their businesses by dividing ownership into smaller parts and sell those parts to
the public in the form of shares.
Describe the characteristics of fixed income securities
Essentially loans provided by investors.
Term-to-maturity: the length of time between the current date and maturity date
Term: short-within 5 years, medium- 5-10 years, longterm-10 years or longer
Par value: the original principal investment
Coupon rate: used to calculate the regular interest payments paid by a bond
Describe the major features of Treasury bills
fixed income securities issued by the Canadian government to finance short term cash needs.
Sold at a discount and then the government pays the investor the face value at maturity. The difference
is interest income.
Very low risk.
Objective: safety of principal and income
Describe the major features of provincial and municipal short term papers
Debt securities issued bu the provincial or municipal government in order to raise money to pay for
capital spending.
Sold at a discount and pay the face value at maturity (like t-bills)
