Having Just Returned from Serving with the U

question 34

Multiple Choice

Having just returned from serving with the U.S. Marines in Afghanistan, Callahan 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 Callahan?

• A) In order for Callahan 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) Callahan 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) Callahan 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, Callahan 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:

Indifferent Toward Mothers

A behavioral observation in attachment theory where infants or young children show no preference between their mothers and complete strangers.

Preoperational Stage

The second stage in Piaget's theory of cognitive development, occurring roughly between the ages of 2 and 7, characterized by symbolic thinking and egocentrism but a lack of operational thought.

Sensorimotor

Refers to the first stage in Piaget's theory of cognitive development, characterized by infants learning through physical interaction with their environment.

Concrete Operational

A stage in Piaget’s theory of cognitive development where children are able to think logically about concrete events.