People who might need to retrieve part or all of their investment relatively soon, such as the elderly, are often advised to invest a higher percentage of their money in bonds, and thus a lower percentage in stocks, than people who can leave the investment untouched for decades. We know, however, that bonds typically have a lower rate of return than stocks.

Why would people be advised to invest in assets that give lower average rates of return?
a. This is bad advice. People should always invest in whichever assets have the highest average rate of return.
b. Although stocks have a higher rate of return in the long run, they are much more volatile, or riskier, in the short run. Therefore, there is a higher probability that the value of the stocks will be less than the original value of the investment for people who might need to withdraw the investment in the short run.
c. Since bondholders get paid before stockholders in the event of bankruptcy of a firm, the average "real" rate of return on stocks and bonds will be the same, with bonds being less risky.
d. Although stocks have higher average rates of return in the long run, bonds have higher average rates of return in the short run. Therefore, bonds are likely to be more profitable for people who might need to get their investment back in the short run.

Answers

Answer 1

Answer:

b. Although stocks have a higher rate of return in the long run, they are much more volatile, or riskier, in the short run. Therefore, there is a higher probability that the value of the stocks will be less than the original value of the investment for people who might need to withdraw the investment in the short run.

Explanation:

The relationship between risk and return plays an important role here. Although stocks have higher returns on average, they are much riskier. One way in which this higher risk can manifest itself is through a portfolio value that fluctuates a lot. So, it is more likely that $1,000 invested in a diversified stock portfolio will be worth only $800 at some point than $1,000 invested in a diversified bond portfolio. If the investor is going to need that $1,000 back at some point soon, then it might be wiser to invest in the lower‑average‑return bond portfolio.

Stocks surely have higher rate of return in the long run but are highly volatile in the short run. If an investor, especially older person, who might need his money in the short run may find that his current value of stock is less than the value of investment. Thus the investor may incur a net loss even if the stock may have high rate of retun in the long run. Hence it is advisable to invest more in bonds if money is to be withdrawn in the short run.


Related Questions

Which statement best describes an advantage of indirect democracy over direct democracy?
A. It can be more responsive to citizens' interests.
B. It can help citizens feel more connected to government.
C. It can better reflect the democratic principle of majority rule.
D. It can make decision making more efficient.

Answers

Answer:

it would be A

Explanation:

Directions: Read the following situations and answer the questions that
follow. Write your answers on a sheet of paper.
1. There is a group at work that often gossips about others on the job.
You like these people but don’t want to be a part of the gossip scene.
What will you do?
2. Your supervisor wants you to work overtime every week, but you have
other commitments outside of work. What will you do?
3. Your colleague in the company you are working has learned that the
manager’s brother has just been arrested for assault. He tends to
discuss this loudly wherever he is.
What should you do without creating any conflict with your colleague?

Answers

1. The ideal is not to engage in gossip at work, not expressing opinions about colleagues and not getting involved in meetings with non-professional matters.

2- The worker must be honest with his supervisors about his commitments outside of work, seeking a joint solution to the problem with weekly overtime.

3. In order not to create a conflict over an issue that you do not want to answer at work, you should be honest and politely ask that non-professional matters not be discussed in the workplace.

How to act ethically at work?

It is essential that the employee acts with respect for the values and individualities of other co-workers, adopting an honest and cordial attitude towards everyone and following the established rules of conduct.

Therefore, through ethics, an organization develops a stronger culture focused on personal development, motivation and collaboration.

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Monopolies are usually harmful to economies because they:

Answers

D. Because if they own everything, they can jack up prices

During the Constitutional Convention, small states did not want their representation based on
Which scenario is not guaranteed under the Articles of Confederation?

Answers

Answer:

a merchant

Explanation:

they can always use the same currency in Connecticut and Georgia

examine the concept of the poor

Answers

Answer:

Although poverty is one of the most well-known and long-lasting circumstances in human history, it is a difficult idea to grasp. Some experts believe it is a reaction to the stress of poverty, while others believe it is a process of adjusting to poverty. There are several historical definitions, but they all relate to a lack of financial income or a reduced social position. Poverty is influenced by a variety of variables, including political, economic, social, and cultural pressures. The passage of time, which encompasses all of these elements in a very complicated manner, has consistently had the biggest impact on the evolving concept.

Explanation:

요.
2
40
20
X
20 40 60
o
80 60 40 20
0
BO
20
O
40 N
Z
60
W-
E
A comparison of the average temperalures
on any given day at points Z, X, and U
on the globe would probably show that
the temperature at point X is

Answers

Answer:

what up dog

Explanation:


The doctrine that holds the view that historical circumstances are determined by a sequence of economic events
connected to the act of production is known as ............
O A. Economic determinism
O B. Historical materialism
11 a 0
O C. Rationalization
O D. Economic materialism

Answers

B historical materialism

Explain how speciation occurs and provide some examples

Answers

Answer:

The definition of speciation is the formation of new species throught the course of evolution. There are many different ways it can occur.

Geographic Isolation - Seperating two species, so that they are in different habitats. Over time these species get acquainted to heir habitats and start evolving to fit in it. Suppose there is a big lake where a species of fish lives, and the lake gets seperated. One side of the lake prefers dark fish and the other prefers lighter fish. On one side, dark fish becomes more prevalent and light fish becomes more prevalent on the ohter side. Soon, this species will split into two species, based on how different they are on the color of their scales.Temporal Isolation - This is when species mate a different times of the year. One example is if you have a bunch of frogs. Most of them mate in the summer. All of a sudden, some of them mate in the Spring as well. Soon these frogs mate a different times and become different species as they don't mate at the same time. The frogs that mate at differnt times can no longer, be the same species.Behavioral - This is when species have different mating calls or courthsips. Lets say you have birds that sing a specific tune to mate and then one day, another group fo birds in the same species sing a different tune. Soon, these two bird species will be different as they sing different tunes and can no longer mate with each other. If they can't mate with each other, they are no longer the same species.

how lack of responsible citizenship can lead to further cases of human rights violation within a community

Answers

The main way in which a lack of responsible citizenship can lead to further cases of human rights violation is a lack of accountability.

What is Responsible Citizenship?

This refers to the activity of citizens where they engage in acts or actions that helps their community and the government to make society better for everyone.

Hence, we can see that the lack of this in society, would lead to less accountability and would inevitably lead to further cases of human rights violations within the community.

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PLEASE HELP! What major country represents democracy during the Cold War?

Answers

The United States represents democracy during Cold War

Which statements describe characteristics of civil law cases? Check all that apply. Civil cases can involve people, organizations, or both. A civil case often results in jail time for the accused person. The case begins when a defendant is accused of a crime. Some civil law cases may be considered criminal law cases, too. A plaintiff is on one side of the case, and a defendant is on the other.

Answers

Answer:

A, civil cases can involve people, orgaizations, or both

D, Some civil law cases may be considered criminal law cases, too

E, A plaintiff is on onw side of the case, and a defendant is on the other

Explanation:

what are factors that may contribute to the youth being hesitant to conduct themselves as responsible citizens​

Answers

According to the age of the youngsters, the social and cognitive development are the factors due to which they become hesitant to conduct themselves as responsible citizens.

Who are youngsters?

A youngster is a person who is elder than a child. it is the age span of 10 years to 16 years when an individual is considered a youngster.

Cognitive development is the phase in the life of a youngster where his/her mental development starts. It occurs in the phase of concrete operative in a youngster where the ages are from 7 years to 11 years. In the phase of cognitive development, the individual obtains social experiences and learns to adapt to the environment which is necessary for getting positive social attitudes.

Therefore, the youngsters become hesitant to consider themselves responsible citizens due to social and cognitive factors.

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#SPJ1

Suppose that an economy consists of only two individuals. Jeremy has $1890 available to spend on goods. He decides to purchase $390 worth of produce from Krista in the current quarter. No other economic activity takes place during the current quarter. Using this information, answer the questions.

For the current quarter, what is the economy's income? $_____________
For the current quarter, what is the economy's expenditure? $_____________

In an economy, how are income and expenditure related?
a. Income is less than expenditure.
b. They are equal.
c. They are unrelated.
d. Income is greater than expenditure.

Answers

Answer:

Economy's income: $390

Economy's expenditure: $390

b. They are equal.

Explanation:

In an economy Income (Y) is the sum of Consumption or private expenditure (C), Investment (I), Government spending (G), and Net Exports (NX).

Y = C + I + G + NX

But as the economy consists only of 2 individuals, Investment (I), Government spending (G), and Net Exports (NX) are Zero. Therefore,

Y = C i.e. Income = Expenditure

In the above scenario, Jeremy spends $390 on produce from Krista. Jeremy's expenditure is equal to Krista's income which is $390. Under the assumptions in this scenario, the sum of all spending that occurs in the economy is exactly equal to the sum of all income that people receive.

In the question, Krista receives $390 in income from selling her produce to Jeremy. The $390 that Jeremy paid for the produce is the amount of expenditure for the economy. The $1890 Jeremy could have used is irrelevant since it is not used in the current quarter. The expenditure a buyer pays for a good or service is equal to the income the seller receives.

How does a resource change if it is considered to be scarce?

Answers

Answer:

Explanation:

Because the more resources a company or someone wants it will eventally be limited or run out, as you used up all the resources.

What is hierarchy of needs? Give definition in your own words

Answers

our actions are motivated by certain physiological needs.

In 3 John, John commends the elect lady and her children for their faithfulness in lovingly helping fellow Christians and strangers. true false

Answers

The answer to the question is false because 3 John is not about the  elect lady and her children.

What is the 3 book of John about?

This chapter of the book is mostly about the hospitality that has been shown to the people of Christian faith.

The book mostly highlights the importance of hospitality especially to the people that were spreading the gospel.

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Observe your community, what do you think is trending today? Why do you say so?

Answers

By observing your community, you will notice that there are certain things that are trending and you can then investigate further to find out why those things are happening.

What is trending in your community?

This is an essay type question and so I cannot give you the answer but I can help guide you.

First you should observe your community to find out if there are any new and popular trends emerging. For instance, more people might be using bicycles to get to work.

You then give evidence as to why you believe your observation is a new trend. For instance, you compare your current observation on bicycles, to bicycle numbers in the past number of years.

You could pull up bicycle numbers for your areas on the internet, interview a bicycle salesman in the area, or draw evidence from your own memory of bicycle usage in the past.

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Which of the following is the best way to avoid plagiarism? Select one: a. Copy the good bits from different resources. b. Reuse an answer your friend gave you, but change the words. c. Use quotations and give credit when referring to resources you used. d. Complete each assignment that does not ask for group work as a group.

Answers

Answer:

A

Explanation:

If you copy good parts from different resources it still won't look the same as the orginal source your taking from, because your taking from multple sources.

What markets are likely to be attracted to travel on cargo ships?

Answers

Answer:

markets are likely to be attracted to travel on cargo ships? What about river cruising? Explain the reasons for your opinions.

Americans have a disproportionate concept of crime rates. Their inflated fear of victimization constitutes a

Answers

The disproportionate concept of crimes that Americans have has inflated fear of victimization which is known as fight or flight

What is the fight or flight phrase about?

This is a term that is used to refer to the psychological response that people have to certain situations.

When confronted by threatening situations, the first response of some people may be to run. For others it may be to confront the issues head on.

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According to the textbook, many Bible scholars believe that James, the half-brother of the Lord and a significant early Christian leader, is the most likely author of the book of James. true false

Answers

Answer:

True

Explanation:

The traditional author is held to be James, "a servant of God and brother of the Lord Jesus Christ". Like Hebrews, James is not so much a letter as an exhortation; the style of the Greek language-text makes it unlikely that it was actually written by James, the brother of Jesus.

When members of a family system are over involved with each other's affairs and are over concerned with the details of each other's lives, they are said to be:

Answers

An enmeshed family is a kind of family system where family members are usually involved with each other's affairs.

What is an enmeshed family ?

An enmeshed family serves as the type of the family system that are mote concerned about the affairs and well being of each other.

Therefore, enmeshed family usually look out for each other and care about each other.

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what is the important factor in the eradication of the social problem? Write any one factor​

Answers

Answer:

9 and 6

Explanation:

9 and 6 is the important factor because you can multiple 9x6=54

What makes a group a minority is that it is smaller in size

Answers

because a group of people whose practices, race, religion, ethnicity, or other characteristics are fewer in numbers than the main groups of those classifications.

Adnon just hired Petra to be part of the financial team and requested that she be at the office at 7:30 a.m. on Monday for her first day. Adnon then e-mailed Petra to remind her two times over the weekend. Adnon assumed that Petra would be late because she is very young and Adnon believes that all young people are irresponsible and disorganized. Which type of perception bias is Adnon showing

Answers

The Frame of reference that influences a perception bias is that type of bias that Adnon is showing towards Petra.

What is a perception bias?

This is a bias that occured when individual's perception is affected by the stereotypes or assumptions they have about other groups.

Also, the Frame of reference influences a perception bias because personal set of beliefs or ideas influences onr judgment of things.

In conclusion, Adnon is showing a perception bias called Frame of reference as she believes that all young people are irresponsible because it is framed from what she knows only.

Read more about Frame of reference

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The original star-bellied Sneetches paid to have their stars removed then declared that they were better because of the lack of stars on their bellies. Because they were the dominant group, they could make and enforce such statements and other rules that ensure they retain their power. This is in line with which theory?

Realistic group conflict theory

Social dominance theory

Social identity theory

Intergroup conflict reduction

Answers

The theory described that shows the original star-bellied Sneetches maintaining power is the Social Dominance theory.

What is the Social Dominance theory?

This is a theory that talks about how a dominant group in a society will usually act in a way that ensures that they remain dominant.

The original star-bellied Sneetches made and enforced statements that maintained their power as the dominant group which is in line with the concepts espoused by the Social dominance theory.

In conclusion, option B is correct.

Find out more on the Social theories at https://brainly.com/question/6602673.

Advantages of living in big cities ​

Answers

Answer:

You will probably live closer to your job and closer to other places that will be more convienent than living in a rural area.

Explanation:

Which of these is true of global economic flows?

Answers

Answer:

i would have answered it, but if you check this please redo it so people know what your talking about

Explanation:

the term domestication refers to?

Answers

Domestication is the process of adapting wild plants and animals for human use.

What did the southern states such as South Carolina still depend on for their economy after the civil war

Answers

Answer:

Sharecropping and tenant farming.

Explanation:

After the Civil War, sharecropping and tenant farming took the place of slavery and the plantation system in the South. Sharecropping and tenant farming were systems in which white landlords (often former plantation slaveowners) entered into contracts with impoverished farm laborers to work their lands.

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Which list shows the fractions in order from greatest to least? *pls help i give brainliest3/6, 2/5, 1/4, 2/52/3, 3/6, 1/4, 2/51/4, 3/6, 2/5, 2/32/3, 3/6, 2/5, 1/4 translate to spanish 1. the bedroom #2 2. the bathroom 3 the garden 4. the flower 5. the tree 6. the plant