Question

In the context of investments, why might income and growth be considered similar or related?

a) Income and growth are always the same because they represent identical financial outcomes.

b) Income and growth are both indicators of financial risk.

c) Investments that generate income often have an impact on overall portfolio growth.

d) Income and growth have no correlation in the realm of investments.

Answer 1

Income and growth in investments are similar because investments that generate income often contribute to overall portfolio growth.

Step-by-step explanation:

Income and growth in the context of investments are considered similar or related because investments that generate income often have an impact on overall portfolio growth. When an investment generates income, such as through dividends or interest payments, that income can be reinvested to purchase more shares or assets, which can lead to growth in the value of the investment over time.

For example, if an investor owns stocks that pay dividends, the received dividends can be reinvested by purchasing additional shares of the same stock or other stocks. This reinvestment of income can contribute to the growth of the investor's portfolio.

Therefore, income and growth are interconnected in investments as income can contribute to and support the growth of an investment portfolio.