Your friend told you that she invested $1,000 in a portfolio of large-company stocks 5 years ago and also reinvested the dividends. Her investment grew to $3,246 as at today. Had she invested that same amount in a Govea bond she would have received $2,500 even if she reinvested the 10 percent coupons paid on the bonds. Given this information, critically discuss
Your friend told you that she invested $1,000 in a portfolio of large-company stocks 5 years ago and also reinvested the dividends. Her investment grew to $3,246 as at today. Had she invested that same amount in a Govea bond she would have received $2,500 even if she reinvested the 10 percent coupons paid on the bonds. Given this information, critically discuss
Chapter2: The Domestic And International Financial Marketplace
Section: Chapter Questions
Problem 2P
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Your friend told you that she invested $1,000 in a portfolio of large-company stocks 5 years ago and also reinvested the dividends. Her investment grew to $3,246 as at today. Had she invested that same amount in a Govea bond she would have received $2,500 even if she reinvested the 10 percent coupons paid on the bonds. Given this information, critically discuss why anyone would want to invest in bonds rather than stocks? Further explain why the price of many individual stocks still go down, even when the overall stock market goes up. How can you avoid the value of your stock from going down?
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