ECON MICRO (with MindTap, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
6th Edition
ISBN: 9781337408059
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 13, Problem 13P
To determine
The comparison between Stocks and bonds and the one that is more risky to own.
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13. Stock quotes - Looking up a stock price
The price of a stock is largely influenced by supply and demand. When more people want to buy a stock, the price goes _______ . By contrast, when more people want to sell a stock, the price goes_________ .
You can look up the current price for a stock, and other important numerical measures, by searching for the company (or the stock’s trading symbol) on popular financial or investing websites. Many newspapers also publish abbreviated information in the financial section for many common stocks, bonds, and mutual funds.
The following table represents the format of typical price quotes for various stocks that would appear in the financial section of a newspaper:
YTD
52 WEEKS
YLD
VOL
NET
% CHG
HI
LO
STOCK (SYM)
DIV
%
PE
100S
LAST
CNG
+9.25
56.31
39.04
Global Communications
GC
0.36
0.72
23.17
58093
50.06
+1.82
+18.87
48.57
36.55
GermCorp
GERM
0.14
0.30
20.48
8134
47.05…
20. Which of the following assets is the most liquid?
(A) Stocks.
(B) Residential real estate.
(C) Gold.
(D) Yachts.
7
1. Financial institutions in the U.S. economy
Suppose Charles would like to use $1,000 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 Charles
the firm. In the event that RoboTroid runs into financial difficulty,
will be paid first.
Suppose Charles decides to buy 100 shares of RoboTroid stock.
Which of the following statements are correct? Check all that apply.
RoboTroid earns revenue when Charles purchases 100 shares, even if he purchases them from an existing shareholder.
O Expectations of a recession that will reduce economywide corporate profits will likely cause the value of Charles's shares to decline.
An increase in the perceived profitability of RoboTroid will likely cause the value of Charles's shares to rise.
Alternatively,…
Chapter 13 Solutions
ECON MICRO (with MindTap, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
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Similar questions
- 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. /hich 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 RoboTroid issues additional shares of stock. Alternatively, Yakov could make a financial investment by…arrow_forward3. Suppose Ford Motor Company issues a five year bond with a face value of $5,000 that pays an annual coupon payment of $150. a. What is the interest rate Ford is paying on the borrowed funds? b. Suppose the market interest rate rises from 3% to 4% a year after Ford issues the bonds. Will the value of the bond increase or decrease?arrow_forward1. Financial institutions in the U.S. economy Suppose Edu decides to use $8,000 currently held as savings to make a financial investment. One method of making a financial investment is the purchase of stock or bonds from a private company. Suppose Warm Breeze, a cloud computing firm, is selling bonds to raise money for a new lab. This practice is called finance. Buying a bond issued by Warm Breeze would give Edu the firm. In the event that Warm Breeze runs into financial difficulty, will be paid first. Suppose instead Edu chooses to buy 250 shares of Warm Breeze stock. Which of the following statements are correct? Check all that apply. Expectations of a recession that will reduce economywide corporate profits will likely cause the value of Edu's shares to decline. The price of his shares will rise if Warm Breeze issues additional shares of stock. ☐ An increase in the perceived profitability of Warm Breeze will likely cause the value of Edu's shares to rise. Alternatively, Edu could…arrow_forward
- 1.Which of the following is not a financial asset? a share of Coca-Cola stock a corporate bond an IOU a piece of real estate a Treasury bondarrow_forward8. What are current liabilities? Non-current liabilities? 9. In what order are assets listed on the statement of financial position? 110. What are closing entries? Which types of accounts are closed?arrow_forwardWhy are bonds somewhat risky to buy, even though they make predetermined payments based on a fixed rate of interest?arrow_forward
- Why should a financial investor care about diversification?arrow_forwardWhy can firms not just use their own profits for financial capital, with no need for outside investors?arrow_forwardWhich has a higher average return over time: stocks, bands, or a savings account? Explain your answer.arrow_forward
- You and your friend have opened an account on E-Trade and have each decided to select five similar companies in which to invest. You are diligent in monitoring your selections, tracking prices, current events, and actions the company has taken. Your friend chooses his companies randomly, pays no attention to the financial news, and spends his leisure time focused on everything besides his investments. Explain what might be the performance for each of your portfolios at the end of the year.arrow_forwardImagine that a local water company issued 10,000 ten-year bond at an interest rate of 6. You are thinking about buying this bond one year before the end of the ten years, but interest rates are now 9. Given the change in interest rates, would you expect to pay more or less than 10,000 for the bond? Calculate what you would actually be willing to pay for this bond.arrow_forwardWhy is it hand to forecast future movements in stock prices?arrow_forward
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