Question: Suppose Jon decides to purchase either a long-term Treasury bond or a share of stock from a company in the Dow Jones Industrial Average. Assume
Suppose Jon decides to purchase either a long-term Treasury bond or a share of stock from a company in the Dow Jones Industrial Average. Assume that either one will behave similarly to the average security in their class, and ignore the effect of market conditions. Which security is more likely to lose most of its value in the next year after Jon purchases it? they are both guaranteed to increase in value the stock the bond the probabilities of major loss are the same O Based on historical returns, which security is likely to gr ow more significantly in value after Jon purchases it? O the stock O the bond O the probabilities of substantial gain are the same O they are both guaranteed to increase in value Given your answers to the above questions, what should your advice be to Jon if he does not expect to sell the security for at least 20 years? O Based on historical returns, the bond will likely outperform the stock over that period. O The bond is a safer bet because there is no risk of default. O Flip a coin to pick which security to buy. O Based on historical returns, the stock will ikely outperform the bond over that period
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