You Own $10,000 in Personal Property, $2,000 in Company X

question 198

Multiple Choice

You own $10,000 in personal property, $2,000 in Company X stocks, $1,000 in U.S. Savings Bonds and have $500 in your checking account. If Company X goes bankrupt, the most you could lose is

• A) $13,500.
• B) $11,500.
• C) $2,000.
• D) $500.

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Definitions:

Risk Level

A measurement or assessment of the degree of uncertainty regarding the outcome of an investment or decision.

Cost of Equity

The return a company requires to decide if an investment meets capital return requirements and is often used to assess the cost of a company’s financing through equity issuance.

Coupon Rate

Each year's interest rate on a bond displayed as a percentage of the bond's face value.

Cost of Capital

The minimum earnings rate a corporation must achieve on its projects to sustain its market valuation and draw in investments.