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Assignment 6_082267

Assignment 6_082267 - BA250 Personal Finance Assignment 6...

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BA250 Personal Finance Assignment 6 12 April 10 Chapter 13 Review Questions Page 430 - 431 1. Stocks generate returns through the distribution of dividends and ultimately through the sailing of the stock. More money is generally realized when the stock is liquidated and taxes are also generally higher with liquidation. 2. Four reasons to invest in stocks are that they outperform all other investments over time, they reduce risk through diversification, they can be liquidated at any time, their growth is determined by more than just interest rates. 3. An investor should ask if the return is meeting expectations, is the company making money, how much is paid in fees, have the goals changed, when should I sell, and how much will I make if I sale today. 13. Technical analysis focuses on supply and demand using computer models while fundamental analysis focuses more on future earnings, dividends, and interest rates. 18. A major advantage of DRIP is that the reinvestment of the dividend is not typically hit with any brokerage fees. Unfortunately, you will still have to pay the taxes on those dividends whenever the stock is sold and figuring that tax amount out is a big disadvantage of this system. 20. Beta measures how responsive a stock is to changes in the market. This measure utility helps to maintain diversity within your portfolio.
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