Nathan Is the Owner of a Small Drapery Manufacturing Business

question 31

Multiple Choice

Nathan is the owner of a small drapery manufacturing business.He has a written contract with a fabric supplier,but some aspects of their agreement were never put into the written document.Why will Nathan have difficulty enforcing the verbal aspects of their agreement?

• A) because the parol evidence rule forbids outside evidence as to the terms of the contract when the written contract is clear
• B) because verbal promises cannot form the basis of contractual obligations
• C) because the contra proferentum rule will result in a court rejecting the verbal terms of the agreement
• D) because the court cannot imply terms into a contract

Recognize the importance of diversification in reducing investment risk.

Understand the risk-return trade-off in investing.

Understand the relationship between future profit expectations and stock prices.

Differentiate the performance and purposes of index funds versus actively managed mutual funds.

---

Definitions:

Promote Diversification

A strategy aimed at reducing risk by allocating investments among various financial instruments, industries, and other categories.

Financial Cooperatives

Member-owned financial institutions that provide savings, credit and other financial services to their members.

Commercial Banks

Commercial banks are financial institutions that accept deposits, offer checking account services, and make loans to individuals and businesses.