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decides to purchase either a long-term Treasury bond or a share of stock from a company in the Dow Jor erage. Assume that either one will behave similarly to the average security in their class, and ignore the ions.

decides to purchase either a long-term Treasury bond or a share of stock from a company in the Dow Jor erage. Assume that either one will behave similarly to the average security in their class, and ignore the ions.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Submit All Question 28 of 30 <> Suppose Jon decides to purchase either a long-term Treasury bond or a share of stock from a company in the Dow Jones Industrial Average. Assume that either one will behave similarly to the average security in their class, and ignore the effect of market conditions. Which security is more likely to lose most of its value in the next year after Jon purchases it? O the probabilities of major loss are the same they are both guaranteed to increase in value the stock the bond Based on historical returns, which security is likely to grow more significantly in value after Jon purchases it? the bond 8:27 PM a 46°F E 4) 12/15/202
Transcribed Image Text:Submit All Question 28 of 30 <> Suppose Jon decides to purchase either a long-term Treasury bond or a share of stock from a company in the Dow Jones Industrial Average. Assume that either one will behave similarly to the average security in their class, and ignore the effect of market conditions. Which security is more likely to lose most of its value in the next year after Jon purchases it? O the probabilities of major loss are the same they are both guaranteed to increase in value the stock the bond Based on historical returns, which security is likely to grow more significantly in value after Jon purchases it? the bond 8:27 PM a 46°F E 4) 12/15/202
Submit All stion 28 of 30 Based on historical returns, which security is likely to grow more significantly in value after Jon purchases it? O the bond the probabilities of substantial gain are the same O the stock O they are both guaranteed to increase in value Given the answers to the questions, what advice should be given to Jon if he does not expect to sell the security for at least 20 years? Flip a coin to pick which security to buy. The bond is a safer bet because there is no risk of default. Based on historical returns, the bond will likely outperform the stock over that period. Based on historical returns, the stock will likely outperform the bond over that period. 46°F へ 12/1
Transcribed Image Text:Submit All stion 28 of 30 Based on historical returns, which security is likely to grow more significantly in value after Jon purchases it? O the bond the probabilities of substantial gain are the same O the stock O they are both guaranteed to increase in value Given the answers to the questions, what advice should be given to Jon if he does not expect to sell the security for at least 20 years? Flip a coin to pick which security to buy. The bond is a safer bet because there is no risk of default. Based on historical returns, the bond will likely outperform the stock over that period. Based on historical returns, the stock will likely outperform the bond over that period. 46°F へ 12/1
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