« previous next »

Author Question: Given that shares are riskier than bonds, why do investors invest in equity? What will be an ... (Read 117 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?

Acetaminophen (Tylenol) in overdose can seriously damage the liver. It should never be taken by people who use alcohol heavily; it can result in severe liver damage and even a condition requiring a liver transplant.

Did you know?

In 2010, opiate painkllers, such as morphine, OxyContin®, and Vicodin®, were tied to almost 60% of drug overdose deaths.

Did you know?

One way to reduce acid reflux is to lose two or three pounds. Most people lose weight in the belly area first when they increase exercise, meaning that heartburn can be reduced quickly by this method.

Did you know?

Hip fractures are the most serious consequences of osteoporosis. The incidence of hip fractures increases with each decade among patients in their 60s to patients in their 90s for both women and men of all populations. Men and women older than 80 years of age show the highest incidence of hip fractures.

Did you know?

Hyperthyroidism leads to an increased rate of metabolism and affects about 1% of women but only 0.1% of men. For most people, this increased metabolic rate causes the thyroid gland to become enlarged (known as a goiter).

Examples of hydrogen bonds and DNA Examples of hydrogen bonds and DNA
A British Bulldog shares a day at the park. A British Bulldog shares a day at the park.
Covalent bonds form by the sharing of electrons Covalent bonds form by the sharing of electrons
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. ...
Ionic Bonds and Polarity Ionic Bonds and Polarity
How to calculate invest at each rate How to calculate invest at each rate
Video: Facilitated Diffusion - Glucose transport

For a complete list of videos, visit our video library