Avi's investments have had disappointing returns. The interest rates on his mutual fund and bond investments have fallen because of a recession and his return on currency trading has declined due to deflation. His investments in the energy sector did not perform as well because of an oil embargo, plus there has been a default on a municipal bond and unexpected declines in the indexes for corporate energy stocks and bonds. In addition, the value of his Clean Energy Co. stocks fell because of a corporate scandal over a product failure. Avi is losing value. What is happening, and what can he do about it?
a. What are bonds? What are their features and how are they traded? (ONE PARAGRAPH FOR EACH QUESTION )
•b. What are stocks? What are their features and how are they traded? (ONE PARAGRAPH FOR EACH QUESTION )
•c. How do you calculate an annual rate of return? (ONE PARAGRAPH FOR EACH QUESTION )
•d. You buy a share of stock for $100 and it pays no dividend. A year later the market price is $105. What is the rate of return? (ONE PARAGRAPH FOR EACH QUESTION )
•e. You buy a share of stock for $100 and a year later the market price is $105 and it pays a dividend of $2. What is the return? (ONE PARAGRAPH FOR EACH QUESTION )
What is the relationship between risk and return? What is the significance of this relationship for the investor? (THREE WELL FORMED PARAGRAPH)
(NOTE PLEASE FOLLOW INSTRUCTION IN ANSWERING THE QUESTION.)
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