Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506756
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter ST3, Problem 4CQ
To determine
Describe the return from stock.
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Students have asked these similar questions
Why do most investors hold diversified portfolios?
At what point in one’s life is it safest to try a risky investment? Closer to or further from retirement?
How would you describe the relationship between a risky investment and the
return on that investment (think stocks or retirement accounts)?
a casual or limited relationship
there is no relationship between the level of risk and the return you get on
your investment
a direct or positively correlated relationship
an inverse or negatively correlated relationship
Chapter ST3 Solutions
Macroeconomics: Private and Public Choice (MindTap Course List)
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Similar questions
- At what point in one’s life is it safest to try a risky investment? Closer to or further from retirement? Explain your logic.arrow_forwardWhy are investors’ utility curves important in portfolio theory?arrow_forward"Knowing how to secure your financial well-being is one of the most important things you'll ever need in life. You don't have to be a genius to do it. You just need to know a few basics, form a plan, and be ready to stick to it. No matter how much or little money you have, the important thing is to educate yourself about your opportunities. At the SEC [Securities and Exchange Commission], we enforce the laws that determine how investments are offered and sold to you. These laws protect investors, but you need to do your part, too. No one can guarantee that you'll make money from investments you make." Use the excerpt from the SEC's Guide to Saving and Investing to answer the following. Be sure to write in complete sentences. Explain different types of investments and savings accounts and how they help your money grow over time. Describe the importance of government agencies, like the SEC, in protecting your investments.arrow_forward
- Young people with little wealth should not invest money in risky assets such as the stock market, because they can’t afford to lose what little money they have.” Do you agree or disagree with this statement? Why?arrow_forwardWhat advantage do you have if you begin investing for retirement at a young age? There is no advantage to starting to invest for retirement at a young age, a long time to take advantage of the time value of money, a guaranteed investment portfolio, a short time to take advantage of the time value of moneyarrow_forwardSuppose you have just inherited $10,500 and are considering different options for investing the money to maximize your return. If you are risk-neutral (that is, neither seek out or shy away from risk), which of the following options should you choose to maximize your expected return? A. Hold the money in cash and earn zero return. B. Invest the money in a corporate bond, with a stated return of 4%, but there is a chance of 9% the company could go bankrupt. C. Put the money in an interest-bearing checking account, which earns 3%. The FDIC insures the account against bank failure. D. Loan the money to one of your friends' roommates, Mike, at an agreed upon interest rate of 7%, but you believe there is a 5% chance that Mike will leave town without repaying you.arrow_forward
- As an investment advisor, you tell a client that an investment in a mutual fund has (over the next year) a higher expected return than an investment in the money market. The client then asks the following questions: a. Does that imply that the mutual fund will certainly yield a higher return than the money market? b. Does it follow that I should invest in the mutual fund rather than in the money market? How would you reply?arrow_forwardAs an investor, how do you diversify against risk?arrow_forwardShould a person who is risk-averse hold a portfolio with no stock and only bonds? Explain.arrow_forward
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