« previous next »

Author Question: Given that shares are riskier than bonds, why do investors invest in equity? What will be an ... (Read 114 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?

Asthma is the most common chronic childhood disease in the world. Most children who develop asthma have symptoms before they are 5 years old.

Did you know?

Side effects from substance abuse include nausea, dehydration, reduced productivitiy, and dependence. Though these effects usually worsen over time, the constant need for the substance often overcomes rational thinking.

Did you know?

Ether was used widely for surgeries but became less popular because of its flammability and its tendency to cause vomiting. In England, it was quickly replaced by chloroform, but this agent caused many deaths and lost popularity.

Did you know?

Though methadone is often used to treat dependency on other opioids, the drug itself can be abused. Crushing or snorting methadone can achieve the opiate "rush" desired by addicts. Improper use such as these can lead to a dangerous dependency on methadone. This drug now accounts for nearly one-third of opioid-related deaths.

Did you know?

People often find it difficult to accept the idea that bacteria can be beneficial and improve health. Lactic acid bacteria are good, and when eaten, these bacteria improve health and increase longevity. These bacteria included in foods such as yogurt.

The formation of covalent bonds The formation of covalent bonds
Examples of hydrogen bonds and DNA Examples of hydrogen bonds and DNA
Hydrogen Bonds Can Form Between or Within Molecules Hydrogen Bonds Can Form Between or Within Molecules
Breaking disulfide bonds in proteins Breaking disulfide bonds in proteins
Ionic Bonds and Polarity Ionic Bonds and Polarity
Chemical bonds join atoms into molecules Chemical bonds join atoms into molecules
Video: Type of Transport - Active and Passive Processes

For a complete list of videos, visit our video library