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. Which of 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 Robo Troid issues additional shares of stock. Alternatively, Yakov could make a financial investment by purchasing bonds issued by the government of Japan. Assuming that everything else is equal, a bond issued by the government of Japan most likely pays a interest rate than a bond issued by a government that is engaged in a civil war.
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. Which of 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 Robo Troid issues additional shares of stock. Alternatively, Yakov could make a financial investment by purchasing bonds issued by the government of Japan. Assuming that everything else is equal, a bond issued by the government of Japan most likely pays a interest rate than a bond issued by a government that is engaged in a civil war.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![**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 **equity** finance. Buying a share of RoboTroid stock would give Yakov **ownership in** the firm. In the event that RoboTroid runs into financial difficulty, **creditors** will be paid first.
Suppose Yakov decides to buy 100 shares of RoboTroid stock.
Which of the following statements are correct? *Check all that apply.*
- [ ] An increase in the perceived profitability of RoboTroid will likely cause the value of Yakov's shares to rise.
- [ ] Expectations of a recession that will reduce economywide corporate profits will likely cause the value of Yakov's shares to decline.
- [ ] The price of his shares will rise if RoboTroid issues additional shares of stock.
Alternatively, Yakov could make a financial investment by purchasing bonds issued by the government of Japan.
Assuming that everything else is equal, a bond issued by the government of Japan most likely pays a **lower** interest rate than a bond issued by a government that is engaged in a civil war.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F095e7339-ae56-4f10-abfe-6ee1503767c2%2F7434225f-f017-4dfb-97c4-c6f4af6ddd30%2Fwww7urr_processed.png&w=3840&q=75)
Transcribed Image Text:**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 **equity** finance. Buying a share of RoboTroid stock would give Yakov **ownership in** the firm. In the event that RoboTroid runs into financial difficulty, **creditors** will be paid first.
Suppose Yakov decides to buy 100 shares of RoboTroid stock.
Which of the following statements are correct? *Check all that apply.*
- [ ] An increase in the perceived profitability of RoboTroid will likely cause the value of Yakov's shares to rise.
- [ ] Expectations of a recession that will reduce economywide corporate profits will likely cause the value of Yakov's shares to decline.
- [ ] The price of his shares will rise if RoboTroid issues additional shares of stock.
Alternatively, Yakov could make a financial investment by purchasing bonds issued by the government of Japan.
Assuming that everything else is equal, a bond issued by the government of Japan most likely pays a **lower** interest rate than a bond issued by a government that is engaged in a civil war.
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