Chapter 17: Q.16 (page 426)
What is capital gain?
The profit made by selling securities is referred to as capital gain.
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What is a bond?
Why are bonds somewhat risky to buy, even though they make predetermined payments based on a fixed rate of interest?
Is investing in housing always a very safe investment?
Why are banks called “financial intermediaries”?
Answer these three questions about early-stage corporate finance:
(a) Why do very small companies tend to raise money from private investors instead of through an IPO?
(b) Why do small, young companies often prefer an IPO to borrowing from a bank or issuing bonds?
(c) Who has better information about whether a small firm is likely to earn profits, a venture capitalist or a potential bondholder, and why?
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