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Homework answers / question archive / Financial institutions in the U
Financial institutions in the U.S. economy Suppose Larry would like to use $7,000 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 TourtiTech, a hand-held computing firm, is selling stocks to raise money for a new lab—a practice known as equity finance...Yin,. a share of TouchTech stock would give tarry an IOU, or promise to pay, froni v• the firm. In the event that TouchTech runs into financial difficulty, tarry and the other stockholders will be paid first.
Suppose Larry decides to buy 100 shares of TouchTech stock.
Which of the following statements are correct? Check all that apply.
IS The price of his shares will rise if TouchTech issues additional shares of stock. 0 An increase in the perceived profitability of TouchTech will likely cause the value of Larrys shares to rise. 0 Expectations of a recession that will reduce economywide corporate profits wrillikelY cause the value of Larrv's shares to decline.
Alternatively, Larry could make a financial investment by purchasing bonds issued by the U.S. government.
Assumih9 that everythu, eise is equal, a u.s. government bond that matures 30 years from now most likely pays a lower interest rate than a U.S. government bond that matures 10 years from now.
Larry would like to use $7,000 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 TouchTech, a hand-held computing firm, is selling stocks to raise money for a new lab-a practice known as Equity finance. Buying a share of Touch Tech stock would give Larry a claim to partial ownership in the firm. In the event that TouchTech runs into financial difficulty, the bondholders will be paid first.
Suppose Larry decides to buy 100 shares of TouchTech stock. The following statements are correct.
Alternatively, Larry could make a financial investment by purchasing bonds issued by the U.S. government.
Assuming that everything else is equal, a municipal bond issued by a state most likely pays a Lower interest rate than a corporate bond issued by an electronics manufacturer.
