1. Why do people invest in stocks? Is stock a riskier investment than bonds? Why or...

70.2K

Verified Solution

Question

Finance

1. Why do people invest in stocks? Is stock a riskier investmentthan bonds? Why or why not? How is preferred stock similar tobonds? To common stock?
2. Why would economic growth affect the value of a stock?
3. What are the limitations of the generalized dividendmodel?
4.What are the risks faced by investors investing in stocks inemerging markets?
5.What is the motivation for buying foreign stocks?

Answer & Explanation Solved by verified expert

4.1 Ratings (525 Votes)

1 People invest in stocks for the simplest reason that stock as an asset class provides highest potential returns Investors earn in the form of dividends that the stock pays and also in the form of appreciation in the prices of stocks leading to capital gains Yes stocks are riskier investments that bonds because stock prices are subjected to market risks and hence can be very volatile In fact a stock can potentially lose its entire value overnight Thus stocks are riskier than bonds due to the high volatility associated with stocks Bonds have a guaranteed return but See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

1. Why do people invest in stocks? Is stock a riskier investmentthan bonds? Why or why not? How is preferred stock similar tobonds? To common stock?2. Why would economic growth affect the value of a stock?3. What are the limitations of the generalized dividendmodel?4.What are the risks faced by investors investing in stocks inemerging markets?5.What is the motivation for buying foreign stocks?