You Wish to Own Stock While Keeping Your Risk as Low

question 38

Multiple Choice

You wish to own stock while keeping your risk as low as possible. Which of the following actions would accomplish this goal?

• A)Purchasing a stock mutual fund
• B)Purchasing shares of Exxon and GM
• C)Purchasing shares of Exxon and GM on margin
• D)Purchasing U.S. Treasury securities

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Definitions:

Inflation

The rate at which the general level of prices for goods and services is rising, and, consequently, the purchasing power of currency is falling.

Unemployment

Occurs when individuals who are actively seeking work are unable to find employment. It is typically measured as a percentage of the labor force.

Supply Shocks

Unexpected events that suddenly change the supply of a good or service, potentially leading to rapid price changes.

Short-Run Phillips Curve

A curve that illustrates the inverse relationship between the rate of inflation and the unemployment rate in the short term, suggesting that lower unemployment comes with higher inflation.