1. Financial institutions in the U.S. economySuppose Andrew would like to use $3,000 of his savings to make a financial investment.One way of making a financial investment is to purchase stock or bonds from a private company.Suppose TouchTech, a hand-held computing firm, is selling stocks to raise money for a new lab-a practice known asfinance. Buying ashare of Touch Tech stock would give Andrewthe firm. In the event that TouchTech runs into financialdifficulty,will be paid first.Suppose Andrew decides to buy 100 shares of TouchTech stock.Which of the following statements are correct? Check all that apply.TouchTech earns revenue when Andrew purchases 100 shares, even if he purchases them from an existing shareholder.The price of his shares will rise if TouchTech issues additional shares of stock.Expectations of a recession that will reduce economywide corporate profits will likely cause the value of Andrew's shares to decline.Alternatively, Andrew could make a financial investment by purchasing bonds issued by the U.S. government.Assuming that everything else is equal, a U.S. government bond that matures 10 years from now most likely pays ainterest rate than aU.S. government bond that matures 30 years from now.

Debt financing is the process of covering an enterprise's expenses with debt. The most commonly used…

1. Financial institutions in the U.S. economy Suppose Andrew would like to use $3,000 of his savings to make a financial investment. One way of making a financial investment is to purchase stock or bonds from a private company. Suppose TouchTech, a hand-held computing firm, is selling stocks to raise money for a new lab-a practice known as finance. Buying a share of TouchTech stock would give Andrew the firm. In the event that Touch Tech runs into financial difficulty, will be paid first. Suppose Andrew decides to buy 100 shares of TouchTech stock. Which of the following statements are correct? Check all that apply. O TouchTech earns revenue when Andrew purchases 100 shares, even if he purchases them from an existing shareholder. O The price of his shares will rise if Touch Tech issues additional shares of stock. O Expectations of a recession that will reduce economywide corporate profits will likely cause the value of Andrew's shares to decline. Alternatively, Andrew could make a financial investment by purchasing bonds issued by the U.S. government. Assuming that everything else is equal, a U.S. government bond that matures 10 years from now most likely pays a interest rate than a U.S. government bond that matures 30 years from now.

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter2: Developing The Business Idea

Section: Chapter Questions

Problem 6EP