1. Financial institutions in the U.S. economy Suppose Charles would like to use $1,000 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 RoboTroid, a robotics firm, is selling stocks to raise money for a new lab-a practice known as finance. Buying a share of RoboTroid stock would give Charles the firm. In the event that RoboTroid runs into financial difficulty, will be paid first. Suppose Charles decides to buy 100 shares of RoboTroid stock. Which of the following statements are correct? Check all that apply. RoboTroid earns revenue when Charles purchases 100 shares, even if he purchases them from an existing shareholder. O Expectations of a recession that will reduce economywide corporate profits will likely cause the value of Charles's shares to decline. An increase in the perceived profitability of RoboTroid will likely cause the value of Charles's shares to rise. Alternatively, Charles could make a financial investment by purchasing bonds issued by the government of Japan. Assuming that everything else is equal, a bond issued by a government that is engaged in a civil war most likely pays a interest rate than a bond issued by the government of Japan.
1. Financial institutions in the U.S. economy Suppose Charles would like to use $1,000 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 RoboTroid, a robotics firm, is selling stocks to raise money for a new lab-a practice known as finance. Buying a share of RoboTroid stock would give Charles the firm. In the event that RoboTroid runs into financial difficulty, will be paid first. Suppose Charles decides to buy 100 shares of RoboTroid stock. Which of the following statements are correct? Check all that apply. RoboTroid earns revenue when Charles purchases 100 shares, even if he purchases them from an existing shareholder. O Expectations of a recession that will reduce economywide corporate profits will likely cause the value of Charles's shares to decline. An increase in the perceived profitability of RoboTroid will likely cause the value of Charles's shares to rise. Alternatively, Charles could make a financial investment by purchasing bonds issued by the government of Japan. Assuming that everything else is equal, a bond issued by a government that is engaged in a civil war most likely pays a interest rate than a bond issued by the government of Japan.
Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:William J. Baumol, Alan S. Blinder, John L. Solow
Chapter9: The Financial Markets And The Economy: The Tail That Wags The Dog
Section: Chapter Questions
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Transcribed Image Text:1. Financial institutions in the U.S. economy
Suppose Charles would like to use $1,000 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 RoboTroid, a robotics firm, is selling stocks to raise money for a new lab-a practice known as
finance. Buying a share of
RoboTroid stock would give Charles
the firm. In the event that RoboTroid runs into financial difficulty,
will be paid first.
Suppose Charles decides to buy 100 shares of RoboTroid stock.
Which of the following statements are correct? Check all that apply.
RoboTroid earns revenue when Charles purchases 100 shares, even if he purchases them from an existing shareholder.
O Expectations of a recession that will reduce economywide corporate profits will likely cause the value of Charles's shares to decline.
An increase in the perceived profitability of RoboTroid will likely cause the value of Charles's shares to rise.
Alternatively, Charles could make a financial investment by purchasing bonds issued by the government of Japan.
Assuming that everything else is equal, a bond issued by a government that is engaged in a civil war most likely pays a
interest rate than
a bond issued by the government of Japan.
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