You Have Invested $1,000 in a Stock Whose Price Is

question 236

Essay

You have invested $1,000 in a stock whose price is increasing at 10 percent a year.Your stock broker, who is never wrong, recommends a stock rising at 20 percent a year.Assuming the broker earns 4 percent of the stock's value on any purchase or sale of the stock, should you take his or her recommendation?

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Definitions:

Prehistoric Cultural Sites

Locations that provide archaeological evidence of human activity and habitation before recorded history or the advent of written language.

Recent Lava Flows

Molten rock that has erupted from a volcano and solidified on the earth's surface in the recent geological past.

Angular Unconformity

A geological feature where newer layers of sediment or rock rest upon older layers that have been tilted or folded, indicating a significant change in depositional environments.

Rocks Folded

refers to the bending and curving of rock layers under pressure, without the layers breaking.