Module Business Finance Chapter 4
Module Business Finance Chapter 4
Module Business Finance Chapter 4
BUSINESS FINANCE
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BUSINESS FINANCE
CHAPTER 4
The definition, purpose, kinds, advantages, and disadvantages and the risks of
investment
After going through this module, you are expected to:
1. Compare and contrast the different types of investments.
2. Differentiate investment according to its type and features.
3. Enumerate advantages and disadvantages of the different types of investments.
BUSINESS FINANCE
Advantages and Disadvantages of the Different Types of Investments:
Types of Investments Advantages Disadvantages
1. Investing in a Bank Security-insured by PDIC Lower returns – 1% or less
Liquidity for savings for savings, 2-3% time
account deposits Liquidity for time
deposits
2. Investment in Bonds Safest - with fixed interest With fixed term cannot be
Lending money to a withdrawn before maturity
company for expansion of or at a lower amount.
business, which
contributes to economic
growth
3. Investment in Shares of Share in profits in the form Dividends dependent on
Stocks of dividends Capital gains board declaration During
due to increase in market liquidation, creditors have
prices first claim on assets
4. Managed funds Diversification, ease of Fees, performance not
entry, convenience, fund guaranteed, lack of
management and low control, taxation
investment amount.
5. Investment in Property Price appreciation for real Long term process for
property. Safest profits to be realized.
investment
Types of Investments:
As depicted by the image, choose which of the following is your investment option
and explain your answer by highlighting its features and advantages:
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BUSINESS FINANCE
What I Have Learned
1. An investment is any vehicle into which funds can be placed with the expectation
that they will generate positive income and/or increase in value.
2. The following are types of investments: investing in banks, bonds, shares of
stocks, managed funds and investment in property.
3. Each type of investment has its own unique features , advantages and
disadvantages in terms of security, returns, terms, liquidity , diversification,
convenience, fees and taxation.
4. There are a lot of types of investment to choose from. Some are perfect for
beginners, while others require more experience. Each type of investment offers a
different level of risk and reward.
5. Investors should consider each type of investment before determining an asset
allocation that aligns with their goals.