ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Bonds, stocks, mutual funds and exchange-traded funds, or ETFs, are four basic types of investment options.

Detailed explanation-2: -Investors are usually classified into three main categories based on how much risk they can tolerate. They include aggressive, moderate, and conservative. Knowing the risk tolerance level helps investors plan their entire portfolio and will drive how they invest.

Detailed explanation-3: -Short-term investments are assets that can be converted into cash or can be sold within a short period of time, typically within 1-3 years. Common instruments for short-term investing include short-term bonds, Treasury bills, and other money market funds.

Detailed explanation-4: -Yield: The income return on an investment. This refers to the interest or dividend received from a security based on the investment’s value. For example, an annual dividend of $1 paid on an investment worth $100 would imply a yield of 1% ($1 divided by $100).