1. Financial institutions in the U.S. economy Suppose Clinton decides to use $1,000 currently held as savings to make a financial investment. One method of making a financial investment is the purchase of stock or bonds from a private company. 1. Suppose Warm Breeze, a cloud computing firm, is selling bonds to raise money for a new lab. This practice is called finance. Buying a bond issued by Warm Breeze would give Clinton (an IOU, or promise to pay/ a claim to partial ownership in) the firm. In the event that Warm Breeze runs into financial difficulty, (the stockholders/ Clinton and the other bondholders) will be paid first. 2. Which of the following statements are correct? Check all that apply. - The price of his shares will rise if Warm Breeze issues additional shares of stock. - The Dow Jones Industrial Average is an example of a stock exchange where he can purchase Warm Breeze stock. - Expectations of a recession that will reduce economywide corporate profits will likely cause the value of Clinton's shares to decline. 3. Alternatively, Clinton could undertake their financial investment by purchasing bonds issued by the U.S. government. Assuming that everything else is equal, a U.S. government bond that matures 10 years from now most likely pays a (higher/lower) interest rate than a U.S. government bond that matures 30 years from now.
1. Financial institutions in the U.S. economy
Suppose Clinton decides to use $1,000 currently held as savings to make a financial investment.
One method of making a financial investment is the purchase of stock or bonds from a private company.
1. Suppose Warm Breeze, a cloud computing firm, is selling bonds to raise money for a new lab. This practice is called finance. Buying a bond issued by Warm Breeze would give Clinton (an IOU, or promise to pay/ a claim to partial ownership in) the firm. In the event that Warm Breeze runs into financial difficulty, (the stockholders/ Clinton and the other bondholders) will be paid first.
2.
Which of the following statements are correct? Check all that apply.
- The price of his shares will rise if Warm Breeze issues additional shares of stock.
- The Dow Jones Industrial Average is an example of a stock exchange where he can purchase Warm Breeze stock.
- Expectations of a recession that will reduce economywide corporate profits will likely cause the value of Clinton's shares to decline.
3.
Alternatively, Clinton could undertake their financial investment by purchasing bonds issued by the U.S. government.
Assuming that everything else is equal, a U.S. government bond that matures 10 years from now most likely pays a (higher/lower) interest rate than a U.S. government bond that matures 30 years from now.
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