Stocks vs. Bonds Answers

Which of the following statements is true?a.Bonds have more risk than stocks, but offer more return.b.Stocks have more risk than bonds, but offer more return.c.Stocks tend to offer a greater risk, while bonds tend to offer a greater return.d.Bonds tend to offer a greater risk, while bonds tend to offer a greater return.

Bonds issued by Raxin Accounting have a total yield of 11.4% annually, while Raxin Accounting stocks have a total yield of 14.4% annually. If you invest $2,600 in Raxin Accounting bonds and $2,000 in Raxin Accounting stocks, which investment will have a greater return after nine years, and how much greater will it be?a.The bonds will show a profit that is $75.60 greater than that of the stocks.b.The bonds will show a profit that is $67.60 greater than that of the stocks.c.The stocks will show a profit that is $8.00 greater than that of the bonds.d.The stocks will show a profit that is $524.40 greater than that of the bonds.

Why does the government issue only bonds, while companies issue both stocks and bonds?a.The US government does not involve itself in the stock market because it does not want to risk losing money if there should ever be a crash in the stock market.b.Because the stock market is used as a form of gambling, the government refuses to associated itself with the stock market as a way to discourage gambling. c.Stock in a company gives the holder part-ownership of the company, with voting rights on big decisions, and profits when the value goes up. The people already vote on happenings in the government and inherently have ownership of the government. d.A stock is a part ownership in a company, and the leaders of the government won’t have the people owning the government.

Five years ago, Benjamin invested in Parchar Special Effects. He purchased four par value $1,000 bonds from Parchar Special Effects at a market rate of 96.230. Each bond had an interest rate of 7.2%. Benjamin also purchased 200 shares of stock in the same company, each of which cost $19.08 and had a yearly dividend of $2.04. Today, bonds from Parchar Special Effects have a market rate of 104.595, and stock in Parchar Special Effects costs $22.62. If Benjamin liquidates his portfolio and sells all of his investments, which aspect of his investment will have yielded him a greater total profit, and how much greater is it? a. The bonds yielded $940.20 more in profits than the stocks. b. The bonds yielded $33.00 more in profits than the stocks. c. The stocks yielded $373.20 more in profits than the bonds. d. The stocks yielded $973.40 more in profits than the bonds. Please select the best answer from the choices provided

Stock in Chambers Translation cost $18.89 per share when Anthony bought it. He earns $410.40 per year from his 360 shares in Chambers Translation. What is the percent yield on Anthony’s stock?a.6.03%b.2.17%c.0.0603%d.0.0217%

What is risk, as pertains to investing?a.The time period needed to find a buyer for an investment.b.The cost of purchasing an investment.c.The chance you take that your investments will lose their value.d.The opportunity cost of tying your money up in investments.

Four years ago, Sam invested in Grath Oil. She bought three of its $1,000 par value bonds at a market price of 93.938 and with an annual coupon rate of 6.5%. She also bought 450 shares of Grath Oil stock at $44.11, which has paid an annual dividend of $3.10 for each of the last ten years. Today, Grath Oil bonds have a market rate of 98.866 and Grath Oil stock sells for $45.55 per share. Use the scenario above to select the best answer. a. It is equally likely that the company would suspend paying interest on the bonds and dividends on the stock. b. Both the coupon rate and the dividend rate are fixed and cannot change. c. The bonds showed a higher percentage return than that of the stocks. d. The amount of money received annually in interest (on the bonds) and in dividends (on the stocks) depends on the current market prices. Please select the best answer from the choices provided

Mark has invested in Evu Confectioners. He owns 220 shares of stock in Evu Confectioners, with each share costing him $14.79 apiece but paying a yearly dividend of $2.03. Mark also owns three par value $500 bonds from Evu Confectioners, each of which had a market value of 93.630 and which pay 8.8% interest. If Mark’s broker charges a commission of $55 per ten shares of stock bought or sold and a commission of 3% of the market value of each bond bought or sold, which aspect of Mark’s investment in Evu Confectioners has the greater percent yield, and how much greater is it?a.The stocks have a yield 4.33 percentage points greater than that of the bonds.b.The stocks have a yield 0.88 percentage points greater than that of the bonds.c.The bonds have a yield 0.32 percentage points greater than that of the stocks.d.The bonds have a yield 3.68 percentage points greater than that of the stocks.

Cheryl wants to purchase a par value $500 bond from Agram Imports. Agram Imports bonds have a market rate of 102.114 and offer 8.1% interest. If Cheryl’s broker charges a commission of 2.5% of the market value of each bond sold, what is the current yield on Cheryl’s bond?a.0.077b.0.078c.0.081d.0.040

Brenda has money invested in Esti Transport. She owns two par value $1,000 bonds issued by Esti Transport, which currently sells bonds at a market rate of 101.345. She also owns 116 shares of Esti Transport stock, currently selling for $15.22 per share. If, when Brenda made her initial investments, Esti Transport bonds had a market rate of 96.562 and Esti Transport stock had a share price of $13.40, which side of Brenda’s investment has gained a greater percent return, and how much greater is it? (HINT: difference/original) a. The bonds showed a return that was 4.78 percentage points higher than that of the stocks. b. The bonds showed a return that was 4.95 percentage points higher than that of the stocks. c. The stocks showed a return that was 8.63 percentage points higher than that of the bonds. d. The stocks showed a return that was 3.58 percentage points higher than that of the bonds. Please select the best answer from the choices provided