Discuss four reasons to invest in stocks
What will be an ideal response?
Answer: Over time, common stocks outperform all other investments. Although stocks aren't guaranteed to give you any return, they usually give you a worthwhile return.
Stocks reduce risk through diversification. When you include in your portfolio different types of investments that don't move (that is, the rate of return doesn't fluctuate) perfectly together over time, you're able to reduce the risk in your portfolio. Stocks don't move in the same manner as other investments such as bonds, and each stock moves in its own way. Holding stock from multiple industries can greatly reduce your risk.
Stocks are liquid. You can't be assured of the price you'll get when you want to sell your stock, but you won't have difficulty selling it. The secondary markets for common stock are extremely well developed, and as such, you will be able to sell your stock– with minimum transaction costs–whenever you want.
The growth in your investment is determined by more than just interest rates.With some investments, the potential for price appreciation is largely a function of interest rates going down. But with common stock, the value isn't a slave to interest rates.
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All of the following facts pertain to China except:
A) China is in the upper-middle-income category. B) China is the largest single destination for foreign investment in the developing world. C) China is a member of the World Trade Organization. D) China has sprawling bureaucracy. E) China has intellectual property rights.
Internal suppliers organize the research function:
A) by type of research application and by budget category B) by a series of vice presidents and subordinates handling each marketing research project C) in formal departments, single individuals or a committee, or by assigning no one responsibility D) in informal departments organized around budget categories E) by internal suppliers, because they are internal and do not need to organize