1. The grossest-sounding piece of investment advice that Doc White has given you this semester is, “take advantage of DRIPs.” How does a DRIP impact your investments?
A. It increases the compound earnings on your corporate bonds.
B. A DRIP means that your investment will slowly lose value so that you gain better tax advantages.
C. DRIPs automatically reduce the level of risk that you face as your investment goal approaches.
D. It provides you with stock dividends in place of cash dividends.
2. Alex says that there are 3 main reasons you would like to have money in your hands today rather than waiting to hopefully receive money in the future. What causes money to have this “time value”?
A. Rabies, Influenza, Obsessive-Compulsive Disorder
B. Risk, Inflation, Opportunity Cost
C. Real Rate of Return, Income Taxes, Other Investments
D. Risk, Income Taxes, Opportunity Cost