Posted: March 7th, 2023

How does each investment generate income or cash flows?

Investment is the process of putting money into something with the expectation of receiving a return on that investment. Investments come in many forms, and each can generate income or cash flows in different ways. Common investments include stocks, bonds, mutual funds, real estate and commodities.

How does each investment generate income or cash flows?

Stocks are shares of ownership in publicly traded companies. When someone purchases a stock they become part-owner of that company and are entitled to receive a portion of its profits via dividends. These dividends are typically paid out quarterly but may vary depending on company policies (Meyer 2020). Furthermore, investors may also be able to realize capital gains from selling their stocks if the price has increased since they purchased them. 

Bonds are debt securities issued by corporations or governments with an agreement to pay interest at regular intervals along with repayment of principal upon maturity date . Interest payments on bonds represent cash flow received by bondholder while principle payment represents recovery initial purchase amount invested( Investing Basics nd) 

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