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Question & Answer: Suppose Paolo would like to invest $6,000 of his savings. One way of investing is to purchase stock or bonds from a private com…..

1. Financial institutions in the U.S. economy Suppose Paolo would like to invest $6,000 of his savings. One way of investing is to purchase stock or bonds from a private company. Suppose NanoSpeck, a biotechnology firm, is selling bonds to raise money for a new lab-a practice known as issued by NanoSpeck would give Paolo finance. Buying a bond the firm. In the event that NanoSpeck runs into financial difficulty, will be paid first. Suppose instead Paolo decides to buy 100 shares of NanoSpeck stock. Which of the following statements are correct? Check all that apply. NanoSpeck earns revenue when Paolo 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 NanoSpeck stock. Expectations of a recession that will reduce economy-wide corporate profits will likely cause the value of Paolos shares to decline. Alternatively, Paolo could invest 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

Suppose Paolo would like to invest $6,000 of his savings. One way of investing is to purchase stock or bonds from a private company. Suppose NanoSpeck, a biotechnology firm, is selling bonds to raise money for a new lab-a practice known as ______ finance. Buying a bond issued by NanoSpeck would give Paolo ________ the firm. In the event that NanoSpeck runs into financial difficulty, _______ will be paid first. Suppose instead Paolo decides to buy 100 shares of NanoSpeck stock. Which of the following statements are correct? Check all that apply. NanoSpeck earns revenue when Paolo 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 NanoSpeck stock. Expectations of a recession that will reduce economy-wide corporate profits will likely cause the value of Paolo’s shares to decline. Alternatively, Paolo could invest 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.

Expert Answer

 

Financial institutions in the U.S. economy

Suppose Paolo would like to invest $6,000 of his savings.

One way of investing is to purchase stock or bonds from a private company.

Suppose NanoSpeck, a biotechnology firm, is selling bonds to raise money for a new lab—a practice known as debt finance. Buying a bond issued by NanoSpeck would give Paolo an IOU promise to pay in the firm. In the event that NanoSpeck runs into financial difficulty, Paolo and the other bondholders will be paid first.

Suppose instead Paolo decides to buy 100 shares of NanoSpeck stock.

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

c) Expectations of a recession that will reduce economy-wide corporate profits will likely cause the value of Paolo’s shares to decline.

Alternatively, Paolo could invest by purchasing bonds issued by the government of Japan.

Assuming that everything else is equal, a corporate bond issued by an electronics manufacturer most likely pays a higher interest rate than a municipal bond issued by a state.

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