Case Study #2: Chapter 5 Business Analysis - Harry, a friend of yours, is taking a course in economics and has become confused by some of the terminologies because of the way people commonly use the same words.  The economics professor says investment occurs when companies buy equipment and build factories.  Yet Harry has always heard people talk about investing as a method of saving when they put money in the bank or purchase securities.  He's confused by these dissimilar uses of the word and has asked you to explain.  After asking for your help, Harry happily states that there's one thing he does understand perfectly about what the econ prof says, and that is "savings equals investment."  Since investing in stocks and bonds is also saving money, it's obvious that savings equal investment!  Write a brief explanation to help Harry out.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
icon
Related questions
Question

Case Study #2: Chapter 5 Business Analysis -

Harry, a friend of yours, is taking a course in economics and has become confused by some of the terminologies because of the way people commonly use the same words.  The economics professor says investment occurs when companies buy equipment and build factories.  Yet Harry has always heard people talk about investing as a method of saving when they put money in the bank or purchase securities.  He's confused by these dissimilar uses of the word and has asked you to explain.  After asking for your help, Harry happily states that there's one thing he does understand perfectly about what the econ prof says, and that is "savings equals investment."  Since investing in stocks and bonds is also saving money, it's obvious that savings equal investment! 

  • Write a brief explanation to help Harry out.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Ethical Decision Making
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education