Having Just Returned from Serving with the U

question 263

Multiple Choice

Having just returned from serving with the U.S.Marines in Afghanistan,Alejandro has managed to save most of his earnings.He has enrolled in the local community college and he is living in his parent's lower level while he assimilates back into U.S.life.As his business major friend,he has come to you for advice.He would like to see his $40,000 savings grow,yet he knows that he will need it in about five years when he and his girlfriend are out of school and make plans to get married.He also worries that his car may break down and he will need to invest in another used car.Which of the following would you suggest for Alejandro?

• A)In order for Alejandro to see growth,he will need to place the entire $40,000 in one stock offering.You suggest a biotech stock that promises growth.
• B)Alejandro is still young.He needs to consider high growth,higher risk stocks and corporate bonds.He is young enough to recoup his investment if it should experience a loss.
• C)Alejandro should determine what types of companies he is passionate about.Does he like socially conscious companies;does he want to show his appreciation to the defense industry for weaponry that brought him back safely? He should lead with his heart,but should be warned that some of those companies will produce better yields than others.
• D)Since liquidity is a concern,Alejandro would do best to diversify into four to eight different investments,and keep a reasonable amount in cash a savings account)for emergencies.

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Definitions:

Leisure

Free time when one is not working or attending to other duties, often used for relaxation, entertainment, or hobbies.

Nonlabor Income

Income received that does not come from employment or work, such as investment returns or inheritance.

Wage Rate

The amount of money paid to an employee for a unit of time worked, typically expressed per hour or year.

Leisure

Represents time that an individual spends away from work and other compulsory activities, often used for relaxation, recreation, or personal interests.