Before Investing in a New Stock Issue, the Investor Should

question 16

True/False

Before investing in a new stock issue, the investor should consider the management of the firm, past performance record, and intended use of funds.

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Definitions:

Opportunity Costs

The cost of opting for one alternative over another, typically representing the benefits one misses out on when choosing a particular option.

Variable Costs

Expenses that change in proportion to the activity of a business, such as costs for raw materials or production supplies.

Opportunity Costs

The cost of forgoing the next best alternative when making a decision.

Sunk Costs

Costs that have already been incurred and cannot be recovered or altered, and thus should not affect future business decisions.