Suppose Jaylan decides to use $4500 currently held as savings to make a financial investment. One method of making a financial investment is the purchase of stock or bonds from a private company. Suppose Warm Breeze, a cloud computing firm, is selling bonds to raise money for a new lab. This practice is called finance. Buying a bond issued by Warm Breeze would give Jaylan a creditor claim on the firm. In the event that Warm Breeze runs into financial difficulty, bondholders will be paid first.
Suppose instead Jaylan chooses to buy 250 shares of Warm Breeze stock. Which of the following statements are correct? Check all that apply.
The Dow Jones Industrial Average is an example of a stock exchange where he can purchase Warm Breeze stock.
Warm Breeze earns revenue when Jaylan purchases 250 shares, even if he purchases them from an existing shareholder.
An increase in the perceived profitability of Warm Breeze will likely cause the value of Jaylan’s shares to rise.
Alternatively, Jaylan could undertake their financial investment by purchasing bonds issued by the U.S. government.
Assuming that everything else is equal, a U.S. government bond that matures 10 years from now most likely pays a higher interest rate than a U.S. government bond that matures 30 years from now.
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