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It is impossible to determine whether the bond's value will increase or
decrease.
Question 4. Question : (TCO 5) Which of the following individuals
should have the highest tolerance for risk?
Joan Cummings, who is a single mother with two small children
Darren Carter, who works for American Airlines and is worried that
he is going to be laid off soon
Barry Parks, who is an investment banker and earns over $200,000
per year
Michael Clark, who is 74 years old and been retired for 6 years
Fred Funderbunk, who delivers pizzas and makes about $15,000 per
year
Question 5. Question : (TCO 5) Which of the following statements is
false?
When choosing an investment, it is necessary to consider the risk
factor.
During inflationary times, there is a risk that the financial return on
an investment will not keep pace with the rate of inflation.
The interest rate risk associated with investments in bonds is the result
of changes in business conditions faced by companies.
The risk of business failure deals with changes in the value of stocks
and bonds due to changes and risks within a business itself.
The prices of stocks, bonds, and other investments fluctuate in the
market.