1. Financial institutions in the U.S. economySuppose Yakov 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 RoboTroid, a robotics firm, is selling stocks to raise money for a new lab-a practice known asfinance. Buying a share ofRoboTroid stock would give Yakovthe firm. In the event that RoboTroid runs into financial difficulty,will be paid first.Suppose Yakov decides to buy 100 shares of RoboTroid stock./hichthe following statements are correct? Check all that apply.O An increase in the perceived profitability of RoboTroid will likely cause the value of Yakov's shares to rise.O Expectations of a recession that will reduce economywide corporate profits will likely cause the value of Yakov's shares to decline.O The price of his shares will rise if RoboTroid issues additional shares of stock.Alternatively, Yakov could make a financial investment by purchasing bonds issued by the government of Japan.Assuming that everything else is equal, a bond issued by the government of Japan most likely pays ainterest rate than a bond issued bya government that is engaged in a civil war.

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

Answered: 1. Financial institutions in the U.S.…

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

Problem 5TY

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Similar questions

Explain why a financial investor in stocks cannot earn high capital gains simply by buying companies with a demonstrated record of high profits.
Answer these three questions about early-stage corporate finance: Why do very small companies tend to raise money from private investors instead of through an IPO? Why do small, young companies often prefer an IPO to borrowing from a bank or issuing bonds? Who has better information about whether a small firm is likely to earn profits, a venture capitalist or a potential bondholder, and why?
From a firms point of view, how is a bond similar to a bank loan? How are they different?
When do firms receive money from a stock sale in their firm and when do they not receive money?
Which has a higher average return over time: stocks, bands, or a savings account? Explain your answer.
Why can firms not just use their own profits for financial capital, with no need for outside investors?
Many retirement funds charge an administrative fee each year equal to 0.25% on managed assets. Suppose that Alexx and Spenser each invest 5,000 in the same stock this year. Alexx invests directly and earns 5 a year. Spenser uses a retirement fund and earns 4.75. After 30 years, how much more will Alexx have than Spenser?
Why should a financial investor care about diversification?
You have decided to invest in an open-end mutual fund. You are currently looking at a fund-Washington Premier Fund-in your newspaper. The fund is quoted as: Name NAV Net Chg YTD %RET 36.25 0.15 6.95 Assume that today's opening price of Washington Premier Fund equals yesterday's closing price. If you wanted to make your investment first thing this morning, then you should expect to pay for each share of since it Yesterday, each share of sold for $35.95 $43.50 $36.25 $34.44 $0.15 less $0.15 more $6.95 less $6.95 more If you had $8,000 available to invest, you could purchase than it did the day before, and offers a return of 294 368 assesses a 0.15% fee 276 shares of. is a no-load fund charges a 6.95% fee 221 Your evaluation of the Washington Premier Fund is made easier by the fact that: your investment choices are limited. mutual funds are careful to explicitly state their investment objectives. a mutual fund broker will select a customized mix for you. 0.15% 36.25% 6.95% for the year.
Question 2 of 10. Paul owns 100 shares of stock in an S corporation which he purchased for $57 per share. He gave 10 shares to his daughter, Julie. He also sold 10 shares to his friend, Bill, for $65 a share. What are Paul, Julie, and Bill's respective bases after those transactions? Paul: $4,560Julie: $570Bill: $570 Paul: $4,560Julie: $570Bill: $650 Paul: $5,700Julie: $570Bill: $570 Paul: $5,700Julie: $570Bill: $650
CorpCo is a large manufacturing firm with many stockholders. a. The firm paid a dividend of $6 during the past year and it estimates dividends to grow at 7% annually in the future. Firm’s stockholders require a rate of return of 14%. What would be the expected value of each share today? b. Which are the two basic risks affecting returns when shareholders value any business? Briefly explain.
5. On March 1, Bank extends a line of credit to Farmer. Farmer grants Bank a security interest in all "equipment and farm products, now owned or hereafter acquired." Bank properly files a financing statement on March 10, with the financing statement containing after-acquired language. 3 On October 1, Farmer approaches FinanceCo to request a loan for the purchase of a combine. FinanceCo agrees to make the loan and disburses the funds for the purchase directly to the equipment dealer. Farmer signs a security agreement granting FinanceCo a security interest in the combine. Farmer takes delivery of the combine on November 1. On November 26, FinanceCo properly files a financing statement describing the combine by brand, model, and serial number. Farmer subsequently defaults on his obligations to Bank and FinanceCo. Who has priority in the combine? 6. Assume similar facts as above, but that instead of filing a financing statement on November 26 FinanceCo files its financing statement on…

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