« previous next »

Author Question: Given that shares are riskier than bonds, why do investors invest in equity? What will be an ... (Read 111 times)

Lobcity

  • Hero Member
  • *****
  • Posts: 524
on: Jun 29, 2018
Given that shares are riskier than bonds, why do investors invest in equity?
 
  What will be an ideal response?

Question 2

Refer to Figure 18-3. Consider the market for U.S. dollars against the Japanese yen shown above. An event which could have caused the changes shown in the graph would be
 
  A) an increase in U.S. real income.
  B) an economic expansion in the United States.
  C) speculators expect the dollar to depreciate in value in the near future.
  D) a decrease in Japanese interest rates.


juwms

  • Sr. Member
  • ****
  • Posts: 337
Reply #1 on: Jun 29, 2018
Answer to Question 1

Equity investors are rewarded for taking on higher risk with an average rate of return that is greater than the average rate of return on bonds. Although equity returns fluctuate from year to year, investors who are willing to bear the additional risk of investing in shares also benefit from a higher average return.
A-head: INVESTMENT RETURNS
Concept: Risk

Answer to Question 2

D


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Illicit drug use costs the United States approximately $181 billion every year.

Did you know?

The use of salicylates dates back 2,500 years to Hippocrates's recommendation of willow bark (from which a salicylate is derived) as an aid to the pains of childbirth. However, overdosage of salicylates can harm body fluids, electrolytes, the CNS, the GI tract, the ears, the lungs, the blood, the liver, and the kidneys and cause coma or death.

Did you know?

The Food and Drug Administration has approved Risperdal, an adult antipsychotic drug, for the symptomatic treatment of irritability in children and adolescents with autism. The approval is the first for the use of a drug to treat behaviors associated with autism in children. These behaviors are included under the general heading of irritability and include aggression, deliberate self-injury, and temper tantrums.

Did you know?

More than 34,000 trademarked medication names and more than 10,000 generic medication names are in use in the United States.

Did you know?

Children of people with alcoholism are more inclined to drink alcohol or use hard drugs. In fact, they are 400 times more likely to use hard drugs than those who do not have a family history of alcohol addiction.

Examples of hydrogen bonds Examples of hydrogen bonds
Nonpolar and polar bonds in an organic molecule Nonpolar and polar bonds in an organic molecule
Hydrogen Bonds Can Form Between or Within Molecules Hydrogen Bonds Can Form Between or Within Molecules
Hydrogen bonds in Nylon Hydrogen bonds in Nylon
Summary of Bonds and their Properties Summary of Bonds and their Properties
Schematic of an IgG molecule: Two heavy and 2 light chains are linked together by disulfide bonds. ... Schematic of an IgG molecule: Two heavy and 2 light chains are linked together by disulfide bonds. ...
Video: Miller's reaction chamber experiment Animation

For a complete list of videos, visit our video library