1. Financial institutions in the U.S. economy
Suppose Tim would like to invest $4,000 of his savings.
One way of investing is to purchase stock or bonds from a private company.
Suppose NanoSpeck, a biotechnology firm, is selling stocks to raise money for a new lab-a practice known as finance. Buying a share of NanoSpeck stock would give Tim the firm. In the event that NanoSpeck runs into financial difficulty, will be paid first.
Suppose Tim decides to buy 100 shares of NanoSpeck stock.
Which of the following statements are correct? Check all that apply.
The price of his shares will rise if NanoSpeck issues additional shares of stock.
Expectations of a recession that will reduce economy-wide corporate profits will likely cause the value of Tim's shares to decline.
The Dow Jones Industrial Average is an example of a stock exchange where he can purchase NanoSpeck stock.
Alternatively, Tim could invest by purchasing bonds issued by the U.S. government.
Assuming that everything else is equal, a U.S. government bond that matures 10 years from now most likely pays a interest rate than a U.S. government bond that matures 30 years from now.