An Individual Would Suffer Lower Losses from an Unexpectedly Higher

question 11

Multiple Choice

An individual would suffer lower losses from an unexpectedly higher inflation rate if

• A)she held much currency and owned few bonds.
• B)she held much currency and owned many bonds.
• C)she held little currency and owned few bonds.
• D)she held little currency and owned many bonds.

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Definitions:

Par Value

The nominal or face value of a bond, stock, or coupon as indicated on a certificate or bond itself, often used as a legal capital measurement.

Common Stock

A type of equity security that represents ownership in a corporation, giving holders voting rights and a share in the company's profits through dividends.

Cumulative Preferred Stock

Stock that entitles its holders to any undeclared dividends that have accumulated before common stockholders receive their dividends.

Cash Dividends

A disbursement of profits from a company to its owners or investors, usually as a profit-sharing mechanism.