When an investor purchases __________,then he/she is purchasing a claim on the net worth of the firm.

Question

Quizplus · Accepted Answer

When an investor purchases stock, they are essentially buying ownership in the company and therefore a claim on the net worth of the firm. Bonds represent debt that the company owes and mutual funds pool together money from multiple investors to invest in a variety of assets, so neither of these options involve ownership in the company's net worth. Real estate is also not a claim on the net worth of the firm, as it is a separate asset class.

When an Investor Purchases __________,Then He/she Is Purchasing a Claim