4
QuizMultiple Choice

Cumulative Exam — Cumulative exam

Question 4 • $2526: Full: 2102320: Economics HONORS: NEW CREDIT

Angela is considering buying stock in a popular computer software company whose price has dropped significantly in the last year. Why might this be a wise move for Angela to make?

Answer
A
because it is smart to buy when prices are high and sell when prices are low
B
because it is smart to buy when prices are low and sell when prices are high
C
because her investment will be guaranteed by the government if the company fails
D
because the company will rebound because she likes to use the products they sell

Explanation

A lower stock price may give Angela a chance to buy shares for less and potentially sell them later if the price rises. This is the idea behind buying low and selling high, so choice B is correct. A reverses the sensible strategy, and a past price drop does not guarantee that the company will recover.

AI-written and checked against the verified answer.

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