Why is diversification recommended for investors?
What will be an ideal response?
Holding stock in companies that tend to move in opposite directions during a business cycle will help reduce the fluctuation in return, and so reduce the risk. This approach should yield a return comparable to the overall stock market.
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If real GDP grows at a faster rate than does population, then the standard of living, as measured by real GDP per person,
A) worsens. B) remains the same. C) cannot be measured. D) improves. E) either improves, worsens, or stays the same, depending on the size of the population and the actual level of real GDP.
Why might two Fortune 500 companies borrow the same amount of money for the same term at the same time yet both pay a very different interest rate even when the same banks makes both loans?
What will be an ideal response?
A coupon bond has an annual coupon of $75, a par value of $1000, and a market price of $900. Its current yield equals
A) 7.50%. B) 8.33%. C) its yield to maturity. D) Not enough information has been provided to calculate the current yield for this bond.
Government policies resulting intended to increase equality (cutting the pie into more equal slices) include (i) the welfare system (ii) unemployment insurance (iii) progressive income tax
a. (i) only b. (ii) only c. (i) and (ii) only d. (i), (ii), and (iii)