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Investors sometimes fear that a high-risk investment is especially likely to have low returns. Is this fear true? Does a high risk mean the return must be low?
What is the total amount of interest collected from a $5,000 loan after three years with a simple interest rate of 6%?
If your receive $500 in simple interest on a loan that you made for $10,000 for 5 years, what was the interest rate you charged?
You open a 5-year CD for $1,000 that pays 2% interest, compounded annually. What is the value of that CD at the end of the 5 years?
Why are bonds somewhat risky to buy, even though they make predetermined payments based on a fixed rate?
Why would you prefer to raise the funds through borrowing or by issuing stock? Explain your choice.
What are some reasons why the investment strategy of a 30-year-old might differ from the investment strategy of a 65-year-old?
Explain why a financial investor in stocks cannot earn high capital gains simply by buying companies with a demonstrated record of high profits.
Explain what happens in an economy when the financial markets limit access to capital. How does this affect economic growth and employment?
You and your friend have opened an account on E-Trade. Explain what might be the performance for each of your portfolios at the end of the year.
What is the minimum number of investors it would take to vote to change the top management of the company?
What is the interest rate Ford is paying on the borrowed funds? Will the value of the bond increase or decrease?
Discuss how much money do you have to put into a bank account that pays 10% interest compounded annually to have $10,000 in ten years?
Based on the theory of rational ignorance, what should we expect to happen to voter turnout as the Internet makes information easier to obtain?
What is the main factor preventing a large community from influencing policy in the same way as a special interest group?
Why might legislators vote to impose a tariff on Egyptian cotton, when consumers in their districts would benefit from its availability?
How would you expect this improved information to affect demand for emeralds on this website?
Why would you expect the presence of labor unions to lead to higher or lower pay for worker-members?
What are the main causes for the recent trends in union membership rates in the United States?
What policies, when used together with antidiscrimination laws, might help to reduce the earnings gap between men and women or between white and black workers?
How would you expect immigration by primarily low-skill workers to affect American low-skilled workers?
What factors can explain the relatively small effect of low-skilled immigration on the wages of low-skilled workers?
Why is there asymmetric information in the labor market? What signals can an employer look for that might indicate traits they are seeking in a new employee?
What are some of the ways a seller of labor (that is, someone looking for a job) might reassure a possible employer who is faced with imperfect information?
What are some of the ways that someone looking for a loan might reassure a bank that is faced with imperfect information about whether the loan will be repaid?