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:

Operant Conditioning

A learning process through which the strength of a behavior is modified by reinforcement or punishment.

Learned Helplessness

A belief that nothing one does matters, derived from an experience of random or unpredictable reward and punishment, and theorized to be a basis of depression.

Stimulus-Response Associations

The concept in psychology that behavior is a reaction to environmental stimuli, where specific stimuli elicit specific responses.

John Watson

An American psychologist, regarded as one of the founders of behaviorism, emphasizing the importance of observable behavior over internal phenomena like thoughts and feelings.