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Fixed and Variable Investment Definition and Quiz

You have to give, to get. Here, what you give is the ability to absorb some risk, and what you get is the potential for a higher rate of return.
  1. Define - Define fixed and variable investments.
  2. Context - Use fixed and variable investments in a sentence.
  3. Quiz - Test yourself.
face pic by Paul Alan Davis, CFA
Updated: February 17, 2021
Sometimes investments held for long periods of time don't appear to have downside, but in times of financial stress losses become apparent. Learn more below.

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Understanding Fixed and Variable Investments


Fixed and Variable Investment is an investment with a fixed or stated return, like a coupon on a bond or dividend on a stock, plus a variable component in the form of capital gain or loss. The variable component subjects the investment to principal losses, as well as gains.

Synonyms: growth and income investment

For context, it's important to realize that the fixed rate of return on some investments has the potential to be reduced or eliminated. This is especially true in the case of stock dividends. While a Company's Board of Directors is reluctant to reduce dividend payouts, it does occur during times of financial stress. During the Great Recession in 2008-2009 many banks reduced or eliminated their dividends to conserve cash.

In a Sentence

Joy:  Doc, is a high-yield bond a fixed and variable investment?
Doc:  Certainly! They're bonds with high levels of both.


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Which is not an example of a fixed and variable investment type? | Treasury Bill or Treasury Bond or Treasury Note?

Treasury Bill

For-profit companies typically don't hold fixed and variable investments? | True or False?

True. Most companies hold liquid balances in cash and equivalents.

Questions or Comments?

Still unclear on Fixed and Variable Investments? Try out our financial modeling Series called Quant 101.

Related Terms

Our trained humans found other terms in the category security types you may find helpful.

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