Explain why investing is an essential part of the free enterprise system and discuss the different types of investments and the advantages and disadvantages of each (including bonds, certificates of deposit, money market mutual funds, and stocks).

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Investing is a way in which profit (interest) is generated from the capital employed. In a free enterprise, the investor is not directly involved in the generation of the interest or in the venture but only reaps the benefits of the investment.

Some types of investments include; a certificate of deposit. It is similar to savings accounts in that they are insured and thus risk-free however they differ from savings accounts in that they have a specific, fixed term (often three months, six months, or one to five years), and, usually, a fixed interest rate.

Another is money market mutual funds which are funds that are invested in short-term debt instruments. Money fund mainly buys the highest rated debt which matures in under 13 months. The portfolio must maintain a Weighted Average Maturity (WAM) of 90 days or less and cannot invest more than 5% in any one buyer.

Stock represents a share of ownership in a business enterprise. They usually take the form of form of shares of common stock (or voting shares). As a unit of ownership, they, therefore, carry voting rights that can be exercised in corporate decisions.

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Academic.Tips. (2021) 'Explain why investing is an essential part of the free enterprise system and discuss the different types of investments and the advantages and disadvantages of each (including bonds, certificates of deposit, money market mutual funds, and stocks)'. 7 October.

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Academic.Tips. (2021, October 7). Explain why investing is an essential part of the free enterprise system and discuss the different types of investments and the advantages and disadvantages of each (including bonds, certificates of deposit, money market mutual funds, and stocks). https://academic.tips/question/explain-why-investing-is-an-essential-part-of-the-free-enterprise-system-and-discuss-the-different-types-of-investments-and-the-advantages-and-disadvantages-of-each-including-bonds-certificates-of-d/

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Academic.Tips. 2021. "Explain why investing is an essential part of the free enterprise system and discuss the different types of investments and the advantages and disadvantages of each (including bonds, certificates of deposit, money market mutual funds, and stocks)." October 7, 2021. https://academic.tips/question/explain-why-investing-is-an-essential-part-of-the-free-enterprise-system-and-discuss-the-different-types-of-investments-and-the-advantages-and-disadvantages-of-each-including-bonds-certificates-of-d/.

1. Academic.Tips. "Explain why investing is an essential part of the free enterprise system and discuss the different types of investments and the advantages and disadvantages of each (including bonds, certificates of deposit, money market mutual funds, and stocks)." October 7, 2021. https://academic.tips/question/explain-why-investing-is-an-essential-part-of-the-free-enterprise-system-and-discuss-the-different-types-of-investments-and-the-advantages-and-disadvantages-of-each-including-bonds-certificates-of-d/.

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Academic.Tips. "Explain why investing is an essential part of the free enterprise system and discuss the different types of investments and the advantages and disadvantages of each (including bonds, certificates of deposit, money market mutual funds, and stocks)." October 7, 2021. https://academic.tips/question/explain-why-investing-is-an-essential-part-of-the-free-enterprise-system-and-discuss-the-different-types-of-investments-and-the-advantages-and-disadvantages-of-each-including-bonds-certificates-of-d/.

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"Explain why investing is an essential part of the free enterprise system and discuss the different types of investments and the advantages and disadvantages of each (including bonds, certificates of deposit, money market mutual funds, and stocks)." Academic.Tips, 7 Oct. 2021, academic.tips/question/explain-why-investing-is-an-essential-part-of-the-free-enterprise-system-and-discuss-the-different-types-of-investments-and-the-advantages-and-disadvantages-of-each-including-bonds-certificates-of-d/.

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