Classification of investment

  • Debt Investments
    • Debt-based investments can be further broken down into two sub-categories –
    • Public investments
      • These are investments that can be purchased or traded in open debt markets. These are such things as bonds, debentures, and credit swaps, among others
    • Non-public (private) investments
      • These are any transactions that generate an asset on the balance sheet and are not openly or easily traded in markets. An example is the purchasing of another entity’s accounts receivables or loan receivables
    • Equity Investments
      • These are seen as riskier than debt investments, with the advantage of potentially generating higher returns
      • Public equity investments are any equity-based investments that can be purchased or traded in markets
        • These are often the type of investments that someone has in mind when discussing investments
        • This covers such instruments ascommon stock, preferred stock, stock options, and stock warrants
      • Private equity investments are often larger-scale investments that are not within the scope of a small investor