You were told that $1,000 was invested in a portfolio of large-company stocks 5 years ago and also the dividends were reinvested. The investment grew to $3,456 as at today. Had this same amount be invested in a Government bond she would have received $2,500 even i
You were told that $1,000 was invested in a portfolio of large-company stocks 5 years ago and also the dividends were reinvested. The investment grew to $3,456 as at today. Had this same amount be invested in a Government bond she would have received $2,500 even i
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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You were told that $1,000 was invested in a portfolio of large-company stocks 5 years ago and also the dividends were reinvested.
The investment grew to $3,456 as at today. Had this same amount be invested in a Government bond she would have received $2,500 even if she reinvested the 10 percent coupons paid on the bonds.
Given this information, critically discuss why anyone would want to invest in bonds rather than stocks? Further explain why the price of many individual stocks still go down, even when the overall stock market goes up. How can you avoid the value of your stock from going down?
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