Given that shares are riskier than bonds, why do investors invest in equity?
What will be an ideal response?
Equity investors are rewarded for taking on higher risk with an average rate of return that is greater than the average rate of return on bonds. Although equity returns fluctuate from year to year, investors who are willing to bear the additional risk of investing in shares also benefit from a higher average return.
A-head: INVESTMENT RETURNS
Concept: Risk
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State legislators who wanted to eliminate state regulation of the trucking industry would be most likely to find support among
A) business owners who must pay higher prices for deliveries as a result of the regulations. B) owners and managers of large trucking concerns. C) owners of small trucking concerns. D) unions that represent truck drivers.
If short-term government bond rates were indexed
A) such bonds would be a poor hedge against inflation. B) banks and saving and loan institutions would likely lose deposits. C) the government would gain from the implied inflation tax. D) the government would gain from the implied inflation subsidy.