Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. 1. why do people invest in stocks? is stock a risk

1. Why do people invest in stocks? Is stock a riskier investment than bonds? Why or...

70.2K

Verified Solution

Question

Finance

1. Why do people invest in stocks? Is stock a riskier investmentthan bonds? Why or why not? How is preferred stock similar tobonds? To common stock?

2. Why would economic growth affect the value of a stock?

3. What are the limitations of the generalized dividendmodel?

4.What are the risks faced by investors investing in stocks inemerging markets?

5.What is the motivation for buying foreign stocks?

Answer & Explanation Solved by verified expert
4.1 Ratings (525 Votes)
1 People invest in stocks for the simplest reason that stock as an asset class provides highest potential returns Investors earn in the form of dividends that the stock pays and also in the form of appreciation in the prices of stocks leading to capital gains Yes stocks are riskier investments that bonds because stock prices are subjected to market risks and hence can be very volatile In fact a stock can potentially lose its entire value overnight Thus stocks are riskier than bonds due to the high volatility associated with stocks Bonds have a guaranteed return but    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

1. Why do people invest in stocks? Is stock a riskier investmentthan bonds? Why or why not? How is preferred stock similar tobonds? To common stock?2. Why would economic growth affect the value of a stock?3. What are the limitations of the generalized dividendmodel?4.What are the risks faced by investors investing in stocks inemerging markets?5.What is the motivation for buying foreign stocks?

Other questions asked by students

Q

As the quality engineer for a small chain of fast food restaurants called McDowell’s (They’ve got...

Statistics
Q

Why is the cell theory considered a scientific theory?It has always been proven to be...

Biology
Q

Erica is a teenage mother who gave birth to her child year ago. She was...

Biology
Q

What interest will be earned if 6300 is invested for 7 years at 11 compounded...

Basic Math
Q

The frequency table describes the living arrangements for adults in a certain country Compute the...

Basic Math
Q

James has a revolving credit account at an annual percentage rate of 18%. Use the...

Accounting
Q

Current Position Analysis a. Determine the (1) current ratio and (2) quick ratio for both...

Accounting
Q

what is the general rule about when to borrow long term or short term ...

Accounting
Q

M Company manufactures a cat food product called Special Export. M Company currently has 10,000...

Accounting
Q

What should be accrued as the salary expense? A business wants to accrue for the...

Accounting
Q

[The following information applies to the questions displayed below.] Kubin Company's relevant range of production...

Accounting
Q

The Camino Real Landfill was required to install a plastic liner to prevent leachate from...

Finance