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7. Gunnar keeps hearing that rate of return and risk are closely associated . Explain to him what that means. _ ______________________________________________________________________________ _ ______________________________________________________________________________ 8. Gunnar has a dream that in 10 years he and Eloise can take a year off work and travel around the world. He figures it will cost them $75,000. He has deposited $1000 in a brokerage account. He is planning to make $500 deposits each month. What ROI must his investments earn to get them that round the world trip? ____ 9. Gunnar is considering investing in bonds, but he is concerned about the risk. Is there any way he can find out what professionals say about the creditworthiness of the corporation issuing the bond? _ ______________________________________________________________________________ _ ______________________________________________________________________________ _ ______________________________________________________________________________ 10. Why would a corporation, city, state, county or federal government issue bonds ? _ ______________________________________________________________________________ 4% PRODUCT PREVIEW 11. A bond is evidence of: a. a bad investment b. a college education c. equity ownership in publicly-traded corporation d. the bond issuer’s debt 13. Common stock shareholders hope to their build wealth by _______________ of the shares of stock. a. retirement c. an increase in the value (appreciation) b. dividend payments d. increased coupon rate 14. Gunnar wants to understand bond lingo: the interest rate on a bond is called the _________ rate; the interest payment on a bond is called the _________ payment. 15. When interest rates go down , bond values ______________ because they are more attractive investments. When interest rates rise , bond prices ___________ to compensate for the rate change. 12. Another name for an unsecured corporate bond is a ____________.
Chapter 11 | Investing 101 210
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