Suppose Eric would like to use $6,000 of his savings to make a financial investment. One way of making a financial investment is to purchase stock or bonds from a private company. Suppose TouchTech, a hand-held computing firm, is selling bonds to raise money for a new lab—a practice known as (a. equity, b. debt) finance. Buying a bond issued by TouchTech would give Eric (a. a claim to partial ownership in, b. an IOU, or promise to pay, from) the firm. In the event that TouchTech runs into financial difficulty, (a. Eric and the other bondholders, b. the stockholders) will be paid first. Suppose instead Eric decides to buy 100 shares of TouchTech stock. Which of the following statements are correct? Check all that apply. a.TouchTech earns revenue when Eric purchases 100 shares, even if he purchases them from an existing shareholder. b. The Dow Jones Industrial Average is an example of a stock exchange where he can purchase TouchTech stock. c. An increase in the perceived profitability of TouchTech will likely cause the value of Eric's shares to rise. Alternatively, Eric could make a financial investment by purchasing bonds issued by the U.S. government. Assuming that everything else is equal, a U.S. government bond that matures 30 years from now most likely pays a (a. higher, b. lower) interest rate than a U.S. government bond that matures 10 years from now.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.9P

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Suppose Eric would like to use $6,000 of his savings to make a financial investment.

One way of making a financial investment is to purchase stock or bonds from a private company.

Suppose TouchTech, a hand-held computing firm, is selling bonds to raise money for a new lab—a practice known as (a. equity, b. debt) finance. Buying a bond issued by TouchTech would give Eric (a. a claim to partial ownership in, b. an IOU, or promise to pay, from) the firm. In the event that TouchTech runs into financial difficulty, (a. Eric and the other bondholders, b. the stockholders) will be paid first.

Suppose instead Eric decides to buy 100 shares of TouchTech stock.

Which of the following statements are correct? Check all that apply.

a.TouchTech earns revenue when Eric purchases 100 shares, even if he purchases them from an existing shareholder.

b. The Dow Jones Industrial Average is an example of a stock exchange where he can purchase TouchTech stock.

c. An increase in the perceived profitability of TouchTech will likely cause the value of Eric's shares to rise.

Alternatively, Eric could make a financial investment by purchasing bonds issued by the U.S. government.

Assuming that everything else is equal, a U.S. government bond that matures 30 years from now most likely pays a (a. higher, b. lower) interest rate than a U.S. government bond that matures 10 years from now.

Suppose Eric would like to use $6,000 of his savings to make a financial investment.
One way of making a financial investment is to purchase stock or bonds from a private company.
finance. Buying a
Suppose TouchTech, a hand-held computing firm, is selling bonds to raise money for a new lab-a practice known as
bond issued by TouchTech would give Eric
the firm. In the event that TouchTech runs into financial difficulty,
will be paid first.
Suppose instead Eric decides to buy 100 shares of Touch Tech stock.
Which of the following statements are correct? Check all that apply.
TouchTech earns revenue when Eric purchases 100 shares, even if he purchases them from an existing shareholder.
The Dow Jones Industrial Average is an example of a stock exchange where he can purchase TouchTech stock.
An increase in the perceived profitability of TouchTech will likely cause the value of Eric's shares to rise.
Alternatively, Eric could make a financial investment by purchasing bonds issued by the U.S. government.
Assuming that everything else is equal, a U.S. government bond that matures 30 years from now most likely pays a
U.S. government bond that matures 10 years from now.
interest rate than a

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