The difference between a financial and a real investment is that real investment involves some kind of ____ asset purchase, while financial investment involves ___ which represent(s) the purchase of an asset.
A) tangible, contracts
B) liquid, lending
C) current, arbitrage
D) fixed, proxies

Question

Quizplus · Accepted Answer

Real investment involves purchasing tangible assets such as real estate, equipment or inventory, while financial investment involves purchasing financial instruments such as stocks, bonds, or options which represent ownership in an asset, but do not involve physical ownership of the underlying asset. The option 'tangible' relates to real investment and 'contracts' relates to financial investment, thus making option A the correct choice. Option B and C are incorrect as 'liquid' and 'current' do not fully relate to the given explanation, while option D is incorrect as 'proxies' are not discussed in the given context.

The Difference Between a Financial and a Real Investment Is