« previous next »

Author Question: Given that shares are riskier than bonds, why do investors invest in equity? What will be an ... (Read 110 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?

Adults are resistant to the bacterium that causes Botulism. These bacteria thrive in honey – therefore, honey should never be given to infants since their immune systems are not yet resistant.

Did you know?

The first monoclonal antibodies were made exclusively from mouse cells. Some are now fully human, which means they are likely to be safer and may be more effective than older monoclonal antibodies.

Did you know?

The familiar sounds of your heart are made by the heart's valves as they open and close.

Did you know?

The liver is the only organ that has the ability to regenerate itself after certain types of damage. As much as 25% of the liver can be removed, and it will still regenerate back to its original shape and size. However, the liver cannot regenerate after severe damage caused by alcohol.

Did you know?

Astigmatism is the most common vision problem. It may accompany nearsightedness or farsightedness. It is usually caused by an irregularly shaped cornea, but sometimes it is the result of an irregularly shaped lens. Either type can be corrected by eyeglasses, contact lenses, or refractive surgery.

Polar covalent bonds in water molecules Polar covalent bonds in water molecules
Electrons Are Shared in Covalent Bonds Electrons Are Shared in Covalent Bonds
The iron atom of heme has six coordination bonds: four in the plane The iron atom of heme has six coordination bonds: four in the plane
Australopithecus sediba shares small brain size with other members of Australopithecus but also has Australopithecus sediba shares small brain size with other members of Australopithecus but also has
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. ...
Covalent Bonds Covalent Bonds
Video: Endocytosis -Types and Phagocytosis

For a complete list of videos, visit our video library