Suppose Charles would like to use $4,000 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 Charles ▼ the firm. In the event that Touch Tech runs into financial difficulty, ▼ will be paid first.
Suppose Charles would like to use $4,000 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 Charles ▼ the firm. In the event that Touch Tech runs into financial difficulty, ▼ will be paid first.
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Transcribed Image Text:1. Financial institutions in the U.S. economy
Suppose Charles would like to use $4,000 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 Touch Tech, a hand-held computing firm, is selling stocks to raise money for a new lab-a practice known as
v finance. Buying a
share of Touch Tech stock would give Charles
vthe firm. In the event that TouchTech runs into financial
difficulty,
▼ will be paid first.
Suppose Charles decides to buy 100 shares of Touch Tech stock.
Which of the following statements are correct? Check all that apply.
O Expectations of a recession that will reduce economywide corporate profits will likely cause the value of Charles's shares to decline.
O The price of his shares will rise if TouchTech issues additional shares of stock.
O An increase in the perceived profitability of TouchTech will likely cause the value of Charles's shares to rise.
Alternatively, Charles could make a financial investment by purchasing bonds issued by the government of Japan.
interest rate
Assuming that everything else is equal, a bond issued by a government that is engaged in a civil war most likely pays a
than a bond issued by the government of Japan.
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