fixed investment

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Fixed-Income Security

A security with a guaranteed return. Common examples include bonds, which pay periodic coupons representing a certain interest rate, and preferred stocks, which are legally required to receive a specified dividend at certain times. Typically, fixed-income securities offer lower risk and lower returns than common stock and similar investment vehicles.

fixed investment

any INVESTMENT in plant, machinery, equipment and other durable CAPITAL GOODS. Fixed investment in the provision of social products like roads, hospitals and schools is undertaken by central and local government as part of government expenditure. Fixed investment in plant, equipment and machinery in the private sector will be influenced by the expected returns on such investments and the cost of capital needed to finance planned investments.

Investment is a component of AGGREGATE DEMAND and so affects the level of economic activity in the short run, while fixed investment serves to add to the economic INFRASTRUCTURE and raises POTENTIAL GROSS NATIONAL PRODUCT over the longer term.

In the short run, expected returns from an investment in plant will depend upon business confidence about sales prospects and therefore plant utilization. The volatility of business EXPECTATIONS means that planned levels of investment can vary significantly over time, leading to large changes in the demand for capital goods (see ACCELERATOR), i.e. large fluctuations in the investment component of aggregate demand leading to larger fluctuations in output and employment through the MULTIPLIER effect. See BUSINESS CYCLE, INVENTORY INVESTMENT, MARGINAL EFFICIENCY OF CAPITAL/INVESTMENT.

References in periodicals archive ?
Despite a pickup in the volume of capital spending, the imbalance between fixed investment and consumption is widening.
8 per cent of GDP while the fixed investment to GDP ratio grew marginally from 14.
The fixed investment has increased to Rs 4,517 billion as compared to Rs 4,061 billion last year, recording growth of 11.
The increase "primarily reflected positive contributions from personal consumption expenditures, residential fixed investment, and state and local government spending.
A little over a year ago in these pages we documented the sluggish recovery of private fixed investment since the end of the recession.
January Macro Data Reveals Surprisingly Strong Growth in Fixed Investment
Specifically, the increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures, private inventory investment, nonresidential fixed investment, exports, and federal government spending that were partly offset by a negative contribution from residential fixed investment.
Factors contributing to the decrease in real GDP for the second quarter were primarily negative output in various categories including private inventory investment, nonresidential fixed investment, residential fixed investment, personal consumption expenditures, and exports.
It's interesting, as an aside, that many advisors use bond mutual funds as a fixed investment, when their value can shift significantly.
The sector ratio between fixed investment and the processing value was reportedly seen to settle at around 12% in 2004, clearly at a lower level than in the past few years.
Of course, the degree of uncertainty that existed a year ago at the geopolitical level and the concerns about the risks associated with corporate disclosure scandals and the profitability of fixed investment have dissipated.
One example is the industry-wide transfer of fixed investment from the automakers to the suppliers.