Whether one would be more or less willing to buy a stock.

Question

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Answer 1

Question

Chapter 5, Problem 1Q

a.

To determine

Whether one would be more or less willing to buy a stock.

a.

Expert Solution

Explanation of Solution

One would be less willing to buy a company’s stock if his/her wealth falls because if wealth falls then the individual would be extra careful about decisions related to investing his/her money. A fall in wealth would force investors to not invest in such options, where the chance of losing money is high.

Hence, an individual would be less willing to invest in a stock, if his/her wealth falls.

Economics Concept Introduction

Introduction: Stock refers to a type of security that gives the investor ownership right in a company. There are two main types of stock: one is common stock, and another is preferred stock.

b.

To determine

Whether one would be more or less willing to buy a stock.

b.

Expert Solution

Explanation of Solution

If one has an expectation that the stock price is going to rise, then he will be more willing to purchase the stock because he can sell the purchased stock after some time at a higher price to earn more financial benefit.

Hence, an individual would be more willing to invest in a stock, if he is expecting appreciation in price.

c.

To determine

Whether one would be more or less willing to buy a stock.

c.

Expert Solution

Explanation of Solution

If a bond market becomes more liquid then individuals would be less willing to invest in stock because the stock market will become less liquid in comparison to the bond market. An investor always likes to invest more in that option which is of more liquid nature.

Hence, investors would be less willing to invest in a stock if the bond market becomes more liquid.

d.

To determine

Whether one would be more or less willing to buy a stock.

d.

Expert Solution

Explanation of Solution

One would be less willing to buy a company’s stock if one thinks that the price of gold is going to rise because, in such a situation, an individual can earn more money by purchase of gold now and selling it later at profit.

Hence, one would be less willing to invest in a stock if one thinks that the price of gold is going to rise.

e.

To determine

Whether one would be more or less willing to buy a stock.

e.

Expert Solution

Explanation of Solution

If the prices in the bond market become more volatile, then one would be more willing to invest in a stock because in such a situation stock market will become less risky in comparison to the bond market. So, normally every investor would like to invest in that option which will involve less risk.

Hence, investors would be more willing to invest in a stock if the prices in the bond market become more volatile.

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Students have asked these similar questions

Tasks Exercise 1 Assess the following functions: 1. f(x)= x2+6x+2 2.f '(x)=10x-2x2+5 a. Find the stationary points. (5 marks) b. Determine whether the stationary point is a maximum or minimum. (5 marks) c. Draw the corresponding curves (5 marks)

Problem 2: The sales data over the last 10 years for the Acme Hardware Store are as follows: 2003 $230,000 2008 $526,000 2004 276,000 2009 605,000 2005 328,000 2010 690,000 2006 388,000 2011 779,000 2007 453,000 2012 873,000 1. Calculate the compound growth rate for the period of 2003 to 2012. 2. Based on your answer to part a, forecast sales for both 2013 and 2014. 3. Now calculate the compound growth rate for the period of 2007 to 2012. 1. Based on your answer to part e, forecast sales for both 2013 and 2014. 5. What is the major reason for the differences in your answers to parts b and d? If you were to make your own projections, what would you forecast? (Drawing a graph is very helpful.)

Exercise 4A firm has the following average cost: AC = 200 + 2Q – 36 Q Find the stationary point and determine if it is a maximum or a minimum.b. Find the marginal cost function.

Answer 2

Question

Chapter 5, Problem 1Q

a.

To determine

Whether one would be more or less willing to buy a stock.

a.

Expert Solution

Explanation of Solution

One would be less willing to buy a company’s stock if his/her wealth falls because if wealth falls then the individual would be extra careful about decisions related to investing his/her money. A fall in wealth would force investors to not invest in such options, where the chance of losing money is high.

Hence, an individual would be less willing to invest in a stock, if his/her wealth falls.

Economics Concept Introduction

Introduction: Stock refers to a type of security that gives the investor ownership right in a company. There are two main types of stock: one is common stock, and another is preferred stock.

b.

To determine

Whether one would be more or less willing to buy a stock.

b.

Expert Solution

Explanation of Solution

If one has an expectation that the stock price is going to rise, then he will be more willing to purchase the stock because he can sell the purchased stock after some time at a higher price to earn more financial benefit.

Hence, an individual would be more willing to invest in a stock, if he is expecting appreciation in price.

c.

To determine

Whether one would be more or less willing to buy a stock.

c.

Expert Solution

Explanation of Solution

If a bond market becomes more liquid then individuals would be less willing to invest in stock because the stock market will become less liquid in comparison to the bond market. An investor always likes to invest more in that option which is of more liquid nature.

Hence, investors would be less willing to invest in a stock if the bond market becomes more liquid.

d.

To determine

Whether one would be more or less willing to buy a stock.

d.

Expert Solution

Explanation of Solution

One would be less willing to buy a company’s stock if one thinks that the price of gold is going to rise because, in such a situation, an individual can earn more money by purchase of gold now and selling it later at profit.

Hence, one would be less willing to invest in a stock if one thinks that the price of gold is going to rise.

e.

To determine

Whether one would be more or less willing to buy a stock.

e.

Expert Solution

Explanation of Solution

If the prices in the bond market become more volatile, then one would be more willing to invest in a stock because in such a situation stock market will become less risky in comparison to the bond market. So, normally every investor would like to invest in that option which will involve less risk.

Hence, investors would be more willing to invest in a stock if the prices in the bond market become more volatile.

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Answer 3

Question

Chapter 5, Problem 1Q

a.

To determine

Whether one would be more or less willing to buy a stock.

a.

Expert Solution

Explanation of Solution

One would be less willing to buy a company’s stock if his/her wealth falls because if wealth falls then the individual would be extra careful about decisions related to investing his/her money. A fall in wealth would force investors to not invest in such options, where the chance of losing money is high.

Hence, an individual would be less willing to invest in a stock, if his/her wealth falls.

Economics Concept Introduction

Introduction: Stock refers to a type of security that gives the investor ownership right in a company. There are two main types of stock: one is common stock, and another is preferred stock.

b.

To determine

Whether one would be more or less willing to buy a stock.

b.

Expert Solution

Explanation of Solution

If one has an expectation that the stock price is going to rise, then he will be more willing to purchase the stock because he can sell the purchased stock after some time at a higher price to earn more financial benefit.

Hence, an individual would be more willing to invest in a stock, if he is expecting appreciation in price.

c.

To determine

Whether one would be more or less willing to buy a stock.

c.

Expert Solution

Explanation of Solution

If a bond market becomes more liquid then individuals would be less willing to invest in stock because the stock market will become less liquid in comparison to the bond market. An investor always likes to invest more in that option which is of more liquid nature.

Hence, investors would be less willing to invest in a stock if the bond market becomes more liquid.

d.

To determine

Whether one would be more or less willing to buy a stock.

d.

Expert Solution

Explanation of Solution

One would be less willing to buy a company’s stock if one thinks that the price of gold is going to rise because, in such a situation, an individual can earn more money by purchase of gold now and selling it later at profit.

Hence, one would be less willing to invest in a stock if one thinks that the price of gold is going to rise.

e.

To determine

Whether one would be more or less willing to buy a stock.

e.

Expert Solution

Explanation of Solution

If the prices in the bond market become more volatile, then one would be more willing to invest in a stock because in such a situation stock market will become less risky in comparison to the bond market. So, normally every investor would like to invest in that option which will involve less risk.

Hence, investors would be more willing to invest in a stock if the prices in the bond market become more volatile.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 5, Problem 1Q

a.

To determine

Whether one would be more or less willing to buy a stock.

a.

Expert Solution

Explanation of Solution

One would be less willing to buy a company’s stock if his/her wealth falls because if wealth falls then the individual would be extra careful about decisions related to investing his/her money. A fall in wealth would force investors to not invest in such options, where the chance of losing money is high.

Hence, an individual would be less willing to invest in a stock, if his/her wealth falls.

Economics Concept Introduction

Introduction: Stock refers to a type of security that gives the investor ownership right in a company. There are two main types of stock: one is common stock, and another is preferred stock.

b.

To determine

Whether one would be more or less willing to buy a stock.

b.

Expert Solution

Explanation of Solution

If one has an expectation that the stock price is going to rise, then he will be more willing to purchase the stock because he can sell the purchased stock after some time at a higher price to earn more financial benefit.

Hence, an individual would be more willing to invest in a stock, if he is expecting appreciation in price.

c.

To determine

Whether one would be more or less willing to buy a stock.

c.

Expert Solution

Explanation of Solution

If a bond market becomes more liquid then individuals would be less willing to invest in stock because the stock market will become less liquid in comparison to the bond market. An investor always likes to invest more in that option which is of more liquid nature.

Hence, investors would be less willing to invest in a stock if the bond market becomes more liquid.

d.

To determine

Whether one would be more or less willing to buy a stock.

d.

Expert Solution

Explanation of Solution

One would be less willing to buy a company’s stock if one thinks that the price of gold is going to rise because, in such a situation, an individual can earn more money by purchase of gold now and selling it later at profit.

Hence, one would be less willing to invest in a stock if one thinks that the price of gold is going to rise.

e.

To determine

Whether one would be more or less willing to buy a stock.

e.

Expert Solution

Explanation of Solution

If the prices in the bond market become more volatile, then one would be more willing to invest in a stock because in such a situation stock market will become less risky in comparison to the bond market. So, normally every investor would like to invest in that option which will involve less risk.

Hence, investors would be more willing to invest in a stock if the prices in the bond market become more volatile.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 5, Problem 1Q

a.

To determine

Whether one would be more or less willing to buy a stock.

a.

Expert Solution

Explanation of Solution

One would be less willing to buy a company’s stock if his/her wealth falls because if wealth falls then the individual would be extra careful about decisions related to investing his/her money. A fall in wealth would force investors to not invest in such options, where the chance of losing money is high.

Hence, an individual would be less willing to invest in a stock, if his/her wealth falls.

Economics Concept Introduction

Introduction: Stock refers to a type of security that gives the investor ownership right in a company. There are two main types of stock: one is common stock, and another is preferred stock.

b.

To determine

Whether one would be more or less willing to buy a stock.

b.

Expert Solution

Explanation of Solution

If one has an expectation that the stock price is going to rise, then he will be more willing to purchase the stock because he can sell the purchased stock after some time at a higher price to earn more financial benefit.

Hence, an individual would be more willing to invest in a stock, if he is expecting appreciation in price.

c.

To determine

Whether one would be more or less willing to buy a stock.

c.

Expert Solution

Explanation of Solution

If a bond market becomes more liquid then individuals would be less willing to invest in stock because the stock market will become less liquid in comparison to the bond market. An investor always likes to invest more in that option which is of more liquid nature.

Hence, investors would be less willing to invest in a stock if the bond market becomes more liquid.

d.

To determine

Whether one would be more or less willing to buy a stock.

d.

Expert Solution

Explanation of Solution

One would be less willing to buy a company’s stock if one thinks that the price of gold is going to rise because, in such a situation, an individual can earn more money by purchase of gold now and selling it later at profit.

Hence, one would be less willing to invest in a stock if one thinks that the price of gold is going to rise.

e.

To determine

Whether one would be more or less willing to buy a stock.

e.

Expert Solution

Explanation of Solution

If the prices in the bond market become more volatile, then one would be more willing to invest in a stock because in such a situation stock market will become less risky in comparison to the bond market. So, normally every investor would like to invest in that option which will involve less risk.

Hence, investors would be more willing to invest in a stock if the prices in the bond market become more volatile.

Answer 6

Chapter 5, Problem 1Q

a.

To determine

Whether one would be more or less willing to buy a stock.

a.

Expert Solution

Explanation of Solution

One would be less willing to buy a company’s stock if his/her wealth falls because if wealth falls then the individual would be extra careful about decisions related to investing his/her money. A fall in wealth would force investors to not invest in such options, where the chance of losing money is high.

Hence, an individual would be less willing to invest in a stock, if his/her wealth falls.

Economics Concept Introduction

Introduction: Stock refers to a type of security that gives the investor ownership right in a company. There are two main types of stock: one is common stock, and another is preferred stock.

Answer 7

Chapter 5, Problem 1Q

a.

To determine

Whether one would be more or less willing to buy a stock.

Answer 8

a.

Expert Solution

Explanation of Solution

One would be less willing to buy a company’s stock if his/her wealth falls because if wealth falls then the individual would be extra careful about decisions related to investing his/her money. A fall in wealth would force investors to not invest in such options, where the chance of losing money is high.

Hence, an individual would be less willing to invest in a stock, if his/her wealth falls.

Answer 9

a.

Expert Solution

Answer 10

a.

Expert Solution

Answer 11

Expert Solution

Answer 12

Economics Concept Introduction

Introduction: Stock refers to a type of security that gives the investor ownership right in a company. There are two main types of stock: one is common stock, and another is preferred stock.

Answer 13

b.

To determine

Whether one would be more or less willing to buy a stock.

b.

Expert Solution

Explanation of Solution

If one has an expectation that the stock price is going to rise, then he will be more willing to purchase the stock because he can sell the purchased stock after some time at a higher price to earn more financial benefit.

Hence, an individual would be more willing to invest in a stock, if he is expecting appreciation in price.

Answer 14

b.

To determine

Whether one would be more or less willing to buy a stock.

Answer 15

b.

Expert Solution

Explanation of Solution

If one has an expectation that the stock price is going to rise, then he will be more willing to purchase the stock because he can sell the purchased stock after some time at a higher price to earn more financial benefit.

Hence, an individual would be more willing to invest in a stock, if he is expecting appreciation in price.

Answer 16

b.

Expert Solution

Answer 17

b.

Expert Solution

Answer 18

Expert Solution

Answer 19

c.

To determine

Whether one would be more or less willing to buy a stock.

c.

Expert Solution

Explanation of Solution

If a bond market becomes more liquid then individuals would be less willing to invest in stock because the stock market will become less liquid in comparison to the bond market. An investor always likes to invest more in that option which is of more liquid nature.

Hence, investors would be less willing to invest in a stock if the bond market becomes more liquid.

Answer 20

c.

To determine

Whether one would be more or less willing to buy a stock.

Answer 21

c.

Expert Solution

Explanation of Solution

If a bond market becomes more liquid then individuals would be less willing to invest in stock because the stock market will become less liquid in comparison to the bond market. An investor always likes to invest more in that option which is of more liquid nature.

Hence, investors would be less willing to invest in a stock if the bond market becomes more liquid.

Answer 22

c.

Expert Solution

Answer 23

c.

Expert Solution

Answer 24

Expert Solution

Answer 25

d.

To determine

Whether one would be more or less willing to buy a stock.

d.

Expert Solution

Explanation of Solution

One would be less willing to buy a company’s stock if one thinks that the price of gold is going to rise because, in such a situation, an individual can earn more money by purchase of gold now and selling it later at profit.

Hence, one would be less willing to invest in a stock if one thinks that the price of gold is going to rise.

Answer 26

d.

To determine

Whether one would be more or less willing to buy a stock.

Answer 27

d.

Expert Solution

Explanation of Solution

One would be less willing to buy a company’s stock if one thinks that the price of gold is going to rise because, in such a situation, an individual can earn more money by purchase of gold now and selling it later at profit.

Hence, one would be less willing to invest in a stock if one thinks that the price of gold is going to rise.

Answer 28

d.

Expert Solution

Answer 29

d.

Expert Solution

Answer 30

Expert Solution

Answer 31

e.

To determine

Whether one would be more or less willing to buy a stock.

e.

Expert Solution

Explanation of Solution

If the prices in the bond market become more volatile, then one would be more willing to invest in a stock because in such a situation stock market will become less risky in comparison to the bond market. So, normally every investor would like to invest in that option which will involve less risk.

Hence, investors would be more willing to invest in a stock if the prices in the bond market become more volatile.

Answer 32

e.

To determine

Whether one would be more or less willing to buy a stock.

Answer 33

e.

Expert Solution

Explanation of Solution

If the prices in the bond market become more volatile, then one would be more willing to invest in a stock because in such a situation stock market will become less risky in comparison to the bond market. So, normally every investor would like to invest in that option which will involve less risk.

Hence, investors would be more willing to invest in a stock if the prices in the bond market become more volatile.