Econ Micro (book Only)
6th Edition
ISBN: 9781337408066
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 13, Problem 13P
To determine
The comparison between Stocks and bonds and the one that is more risky to own.
Expert Solution & Answer
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Check out a sample textbook solutionStudents have asked these similar questions
13. Stock quotes - Looking up a stock price
The price of a stock is largely influenced by supply and demand. When more people want to buy a stock, the price goes _______Â . By contrast, when more people want to sell a stock, the price goes_________ .
Â
You can look up the current price for a stock, and other important numerical measures, by searching for the company (or the stock’s trading symbol) on popular financial or investing websites. Many newspapers also publish abbreviated information in the financial section for many common stocks, bonds, and mutual funds.
The following table represents the format of typical price quotes for various stocks that would appear in the financial section of a newspaper:
YTD
52 WEEKS
Â
Â
Â
YLD
Â
VOL
Â
NET
% CHG
HI
LO
STOCK (SYM)
DIV
%
PE
100S
LAST
CNG
+9.25
56.31
39.04
Global Communications
GC
0.36
0.72
23.17
58093
50.06
+1.82
+18.87
48.57
36.55
GermCorp
GERM
0.14
0.30
20.48
8134
47.05…
20. Which of the following assets is the most liquid?
(A) Stocks.
(B) Residential real estate.
(C) Gold.
(D) Yachts.
7
3. Suppose Ford Motor Company issues a five
year bond with a face value of $5,000 that
pays an annual coupon payment of $150.
a. What is the interest rate Ford is paying on
the borrowed funds?
b. Suppose the market interest rate rises from
3% to 4% a year after Ford issues the bonds.
Will the value of the bond increase or
decrease?
Knowledge Booster
Similar questions
- 1. Financial institutions in the U.S. economy Suppose Charles would like to use $1,000 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 RoboTroid, a robotics firm, is selling stocks to raise money for a new lab-a practice known as finance. Buying a share of RoboTroid stock would give Charles the firm. In the event that RoboTroid runs into financial difficulty, will be paid first. Suppose Charles decides to buy 100 shares of RoboTroid stock. Which of the following statements are correct? Check all that apply. RoboTroid earns revenue when Charles purchases 100 shares, even if he purchases them from an existing shareholder. O Expectations of a recession that will reduce economywide corporate profits will likely cause the value of Charles's shares to decline. An increase in the perceived profitability of RoboTroid will likely cause the value of Charles's shares to rise. Alternatively,…arrow_forward8. What are current liabilities? Non-current liabilities? 9. In what order are assets listed on the statement of financial position? 110. What are closing entries? Which types of accounts are closed?arrow_forward1.Which of the following is not a financial asset? a share of Coca-Cola stock a corporate bond an IOU a piece of real estate a Treasury bondarrow_forward
- 1. Financial institutions in the U.S. economy Suppose Yakov would like to use $6,000 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 RoboTroid, a robotics firm, is selling stocks to raise money for a new lab-a practice known as finance. Buying a share of RoboTroid stock would give Yakov the firm. In the event that RoboTroid runs into financial difficulty, will be paid first. Suppose Yakov decides to buy 100 shares of RoboTroid stock. /hich the following statements are correct? Check all that apply. O An increase in the perceived profitability of RoboTroid will likely cause the value of Yakov's shares to rise. O Expectations of a recession that will reduce economywide corporate profits will likely cause the value of Yakov's shares to decline. O The price of his shares will rise if RoboTroid issues additional shares of stock. Alternatively, Yakov could make a financial investment by…arrow_forward1.Which of these is an example of an index (and would have a corresponding Index Fund)? Question options:  Apple stock  US Treasury bonds  A target retirement fund  The S&P 500 2. Suppose you put $1,000 in an account that earns 5% interest per year, every year. You never invest additional money and you never withdraw money or interest payments. So in the first you, you earn $50 in interest. In Year 4, how much will this account earn?  Question options:  Less than $50  More than $50  $50  This is too hard.arrow_forwardWhy are bonds somewhat risky to buy, even though they make predetermined payments based on a fixed rate of interest?arrow_forward
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- Which has a higher average return over time: stocks, bands, or a savings account? Explain your answer.arrow_forwardImagine that a local water company issued 10,000 ten-year bond at an interest rate of 6. You are thinking about buying this bond one year before the end of the ten years, but interest rates are now 9. Given the change in interest rates, would you expect to pay more or less than 10,000 for the bond? Calculate what you would actually be willing to pay for this bond.arrow_forwardWhy is it hand to forecast future movements in stock prices?arrow_forward
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