PRINCIPLES OF MICROECONOMICS (OER)
2nd Edition
ISBN: 9781947172357
Author: OpenStax
Publisher: OpenStax
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Textbook Question
Chapter 17, Problem 22RQ
Why should a financial investor care about diversification?
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Why do most investors hold diversified portfolios?
What advantage do you have if you begin investing for retirement at a young age? There is no advantage to starting to invest for retirement at a young age, a long time to take advantage of the time value of money, a guaranteed investment portfolio, a short time to take advantage of the time value of money
Investors must go for investments that are liquid to ensure availability of funds when needed.
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Chapter 17 Solutions
PRINCIPLES OF MICROECONOMICS (OER)
Ch. 17 - Answer these three questions about early-stage...Ch. 17 - From a firms point of view, how is a bond similar...Ch. 17 - Calculate the equity each of these people has in...Ch. 17 - Which has a higher average return over time:...Ch. 17 - Investors sometimes fear that a high-risk...Ch. 17 - What is the total amount of interest from a 5,000...Ch. 17 - If you receive 500 in simple interest on a loan...Ch. 17 - You open a 5-year CD for 1,000 that pays 2...Ch. 17 - What are the- most common ways for start-up firms...Ch. 17 - Why can firms not just use their own profits for...
Ch. 17 - Why are banks more willing to lend to...Ch. 17 - What is a bond?Ch. 17 - What does a share of stock represent?Ch. 17 - When do firms receive money from a stock sale in...Ch. 17 - What is a dividend?Ch. 17 - What is a capital gain?Ch. 17 - What is the difference between a private company...Ch. 17 - How do the shareholders who own a company choose...Ch. 17 - Why are banks called financial intermediaries?Ch. 17 - Name several different kinds of bank account. How...Ch. 17 - Why are bonds somewhat risky to buy, even though...Ch. 17 - Why should a financial investor care about...Ch. 17 - What is a mutual fund?Ch. 17 - What is an index fund?Ch. 17 - How is buying a house to live in a type of...Ch. 17 - Why is it hand to forecast future movements in...Ch. 17 - What are the two key choices U.S. citizens need to...Ch. 17 - Is investing in housing always a very safe...Ch. 17 - If you owned a small firm that had become somewhat...Ch. 17 - Explain how a company can fail when the safeguards...Ch. 17 - What are some reasons why the investment strategy...Ch. 17 - Explain why a financial investor in stocks cannot...Ch. 17 - Explain what happens in an economy when the...Ch. 17 - You and your friend have opened an account on...Ch. 17 - How do bank failures cause the economy to go into...Ch. 17 - The Darkroom Windowshade Company has 100,000...Ch. 17 - Imagine that a local water company issued 10,000...Ch. 17 - Suppose Ford Motor Company issues a five year bond...Ch. 17 - How much money do you have to put into a bank...Ch. 17 - Many retirement funds charge an administrative fee...
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- Why would lenders want to see that a business already has some level of capitalization before giving it access to more capital by means of a loan?arrow_forwardWhy might an investor prefer to invest indirectly rather than directly?arrow_forwardIn which two markets can you buy stock? Compare and contrast these two markets. What is an IPO?arrow_forward
- Young people with little wealth should not invest money in risky assets such as the stock market, because they can’t afford to lose what little money they have.” Do you agree or disagree with this statement? Why?arrow_forwardWhat is market making? How do investment banks make a profit in market making?arrow_forwardWhat effect might a fall in stock prices have on businessinvestment?arrow_forward
- To triple $1 million, Theo invested today at an annual rate of return of 9 percent. How long will it take Mika to achieve his goal?arrow_forwardWhich type of financial intermediary provides individual investors with professional management of their money and diversification in order to limit the risk of investing? A. mutual funds B. insurance companies C. hedge funds D. investment banksarrow_forwardDistinguish between Simple investments and Nonsimple Investments?arrow_forward
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