Stocks vs. Bonds Answers

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Much of Ann’s investments are in Cilla Shipping. Ten years ago, Ann bought seven bonds issued by Cilla Shipping, each with a par value of $500. The bonds had a market rate of 95.626. Ann also bought 125 shares of Cilla Shipping stock, which at the time sold for $28.00 per share. Today, Cilla Shipping bonds have a market rate of 106.384, and Cilla Shipping stock sells for $30.65 per share. Which of Ann’s investments has increased in value more, and by how much?

A
The value of Ann’s bonds has increased by $45.28 more than the value of her stocks.
B
The value of Ann’s bonds has increased by $22.64 more than the value of her stocks.
C
The value of Ann’s stocks has increased by $107.81 more than the value of her bonds.
D
The value of Ann’s stocks has increased by $8.51 more than the value of her bonds.
3

Josef owns four par value $1,000 bonds from Dowc Beverage Co. Each bond has a market value of 104.561 and gives 9.2% interest. Josef also owns 170 shares of stock in Dowc Beverage Co. Stock in Dowc Beverage Co. has a share price of 26.25 and pays a dividend of $2.38. If the broker Josef employed to purchase these stocks and bonds charges a commission of $72 for each ten shares of stock bought or sold and a commission of 4% of the market value of each bond bought or sold, which aspect of Josef’s investment in Dowc Beverage Co. has a greater percent yield, and how much greater is it?

A
The stocks have a yield 2.15 percentage points higher than that of the bonds.
B
The stocks have a yield 0.27 percentage points higher than that of the bonds.
C
The bonds have a yield 1.35 percentage points higher than that of the stocks.
D
The bonds have a yield 2.08 percentage points higher than that of the stocks.
5

Stocks tend to make better short-term investments, while bonds tend to make better long-term investments.

A
T
B
F
7

Define the concept of risk in investment.

Answer:

The chance that an investment will lose value or not meet expected returns.

11

Maria owns four par value $1,000 bonds from Prince Waste Collection. The bonds pay yearly interest of 7.7%, and had a market value of 97.917 when she bought them. Maria also owns 126 shares of stock in Prince Waste Collection, each of which cost $19.33 and pays a yearly dividend of 85 cents. Which aspect of Maria’s investment in Prince Waste Collection offers a greater percent yield, and how much greater is it?

A
The bonds have a yield 3.466 percentage points greater than that of the stocks.
B
The bonds have a yield 7.863 percentage points greater than that of the stocks.
C
The stocks have a yield 6.75 percentage points greater than that of the bonds.
D
The stocks have a yield 9.01 percentage points greater than that of the bonds.

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