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Simple English definitions for legal terms
investment
Read a random definition: ARB
A quick definition of investment:
Investment: When you buy something like stocks, bonds, or property with the goal of making more money in the future. Sometimes companies invest in other companies to have a say in how they do things. There are different types of investments, like when you just want to make some money back or when you want to have a big say in how a company is run.
A more thorough explanation:
An investment is when someone buys a financial product or an asset with the goal of making money or growing their business. It can also mean when a company invests in another company to influence their decisions.
- Passive investments in debt and equity securities: This is when a company invests money to earn a return on funds that may be needed for future short-term or long-term purposes. For example, a company might invest in stocks or bonds to earn interest or dividends.
- Investments in stock for significant influence: This is when a company invests in another company with the goal of having a significant impact on their operating, investing, and financing policies. If the investing company holds 20% to 50% of the other company's outstanding voting shares, they are assumed to have significant influence.
- Investments in stock for control: This is when a company invests in another company with the goal of having control over their running and financial policies through voting stock ownership. Control is presumed when the investing company holds more than 50% of the other company's outstanding voting shares.
For example, if a company invests in stocks or bonds, they hope to earn money through interest or dividends. If a company invests in another company with significant influence, they hope to influence that company's decisions to benefit their own business. If a company invests in another company for control, they hope to have complete control over that company's decisions.