1. Assume that there are two assets in the world, stocks and bonds. If both sell at the same price, and if stocks are twice as risky as bonds, we should expect that the a. Stocks will not sell. b. Rate of return on stocks will be twice the rate of return on bonds c. Rate of return on bonds will be twice the rate of return on stocks d. Rate of return on bonds will be higher than stocks, by an indeterminate amount
Please, I need help with number 1, 2, 3, 4
1. Assume that there are two assets in the world, stocks and bonds. If both sell at the same
a. Stocks will not sell.
b.
c. Rate of return on bonds will be twice the rate of return on stocks
d. Rate of return on bonds will be higher than stocks, by an indeterminate amount
2. Which of the following describes the relationship between stock and
a. There is a direct and positive relationship between the rate of interest and stock and bond prices. (As interest go up, stock and bond prices rise as well.)
b. The relationship is far too difficult to quantify.
c. There is an inverse relationship between interest rates and the price of a stock or a bond. (As interest rates go up, stock and bond prices decline.)
d. It varies with the performance of the stock or bond market.
3. According to your text, “The stock market looks ahead”. This means
a. Stock prices do not depend at all on what has happened in the past.
b. Stock prices cannot be determined until some point in the future.
c. A firm must focus on what it does tomorrow, not what it does today.
d. Changes in stock prices today depend on a firm’s current performance.
e. Changes in stock prices today depend on what people think the firm will do tomorrow.
4. The price a dealer is willing to pay for a security held by an investor is called the
a.
b. Ask price
c. Bid price
d. Bid-ask spread
e.
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