For the Bold words choose the correct one Suppose Clancy would like to invest $9
ID: 1192631 • Letter: F
Question
For the Bold words choose the correct one
Suppose Clancy would like to invest $9,000 of his savings.
One way of investing 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 or debt) finance. Buying a share of RoboTroid stock would give Clancy (an IOU,or promise to pay, from or a claim to partial ownership in?) the firm. In the event that RoboTroid runs into financial difficulty, (the bondholders or clancy and the other stockholders)? will be paid first.
Suppose Clancy decides to buy 100 shares of RoboTroid stock.
Which of the following statements are correct? Check all that apply.
A) The Dow Jones Industrial Average is an example of a stock exchange where he can purchase RoboTroid stock.
B) The price of his shares will rise if RoboTroid issues additional shares of stock.
C) Expectations of a recession that will reduce economy-wide corporate profits will likely cause the value of Clancy's shares to decline.
Alternatively, Clancy could invest by purchasing bonds issued by the government of Japan.
Assuming that everything else is equal, a bond issued by a government that is engaged in a civil war most likely pays (Higher or Lower?) a interest rate than a bond issued by the government of Japan.
Explanation / Answer
a and c are correct.
also the price of bond for a government in civil war will be higher as the risk of default of such a bond is higher. so in order to compensate for the higher risk, the returns would be more.