Question

Which of the following is classified as investment? I. existing homes II. business spending on new equipment III. purchase of corporate stock IV. taking out a loan to build an office building

Answer 1

The answer is II. business spending on new equipment

Step-by-step explanation:

For a spending to be classified as investment, the money must ne spent or acquiring non-current asset(fixed asset or long-lived asset.

In the question above, only business spending on new equipment will be classified as investment because the business spent money to acquire non-current asset.

Purchase of current stock is a financing activitiy while taking out loan is also a financing activitiy.