1. Which of the following statements is true?
1. Preferred stocks pay a lower potential reward than common stocks.
2. Preferred stock is more risky than common stock.
3. A well diversified investment portfolio should never include junk bonds.
4. By examining the price-earnings ratio of a variety stocks, it is fairly easy to find one that is undervalued.
2. Which of the following statements is false?
1. In real life, when an individual expects the economy to expand, he should hold no nominal assets.
2. the stock and bond markets are very efficient.
3. bond prices will fall when lenders expect higher rates inflation in the future.
4. corporations, unlike proprietorships and partnerships, are subject to double taxation.