Explain what an investment in a mutual fund offers in terms of risk.(1 point)

Question

Responses

Mutual funds offer low risk since they are funded by pooled resources from many different investors.
Mutual funds offer low risk since they are funded by pooled resources from many different investors.

Mutual funds offer moderate risk since they are composed of different types of assets that are diversified.
Mutual funds offer moderate risk since they are composed of different types of assets that are diversified.

Mutual funds offer high risk since they include the purchase of stocks, which are extremely volatile.
Mutual funds offer high risk since they include the purchase of stocks, which are extremely volatile.

Mutual funds offer moderate risk since they are funded by pooled resources from many different investors.
2.An investor purchased 50 shares of stock in a company in 2015. At the time the investor purchased the stock, the value of the stock was priced at $5
per share. The investor sold all 50 shares of stock in 2019. The value of the stock at the time of sale was $6.50
per share. What is the capital gain the investor earned on this investment?(1 point)
Responses

$50
50 dollars

$75
75 dollars

$250
250 dollars

$325
3.Joanna is trying to decide between getting a credit card and getting a line of credit, and she has asked you to help her make a list of pros and cons. What are some pros and cons for each type of credit service?(1 point)
Responses

Lines of credit can be used at the point of sale, while credit cards cannot. Lines of credit typically have a lower interest rate while credit cards typically have higher interest rates.
Lines of credit can be used at the point of sale, while credit cards cannot. Lines of credit typically have a lower interest rate while credit cards typically have higher interest rates.

Credit cards can be used at the point of sale, while lines of credit cannot. Lines of credit typically have a lower interest rate while credit cards typically have higher interest rates.
Credit cards can be used at the point of sale, while lines of credit cannot. Lines of credit typically have a lower interest rate while credit cards typically have higher interest rates.

Lines of credit can be used at the point of sale, while credit cards cannot. Credit cards typically have a lower interest rate while lines of credit typically have higher interest rates.
Lines of credit can be used at the point of sale, while credit cards cannot. Credit cards typically have a lower interest rate while lines of credit typically have higher interest rates.

Credit cards can be used at the point of sale, while lines of credit cannot. Credit cards typically have a lower interest rate while lines of credit typically have higher interest rates.
4.Using the expenditure approach, the Real GDP of a given economy was calculated as 250 million dollars in 2019. In 2020, the economy experienced the following:

An increase of 20 million dollars in consumption.
A decrease of 5 million dollars in investment.
An increase of 10 million dollars in government spending.
The value of all exports decreased by 5 million dollars.
The value of all imports increased 15 million dollars.
What is the Real GDP of the given economy in 2020?

(1 point)
Responses

270 million dollars
270 million dollars

255 million dollars
255 million dollars

295 million dollars
295 million dollars

235 million dollars
235 million dollars
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Answer 1

Let's address each of your questions one by one:

1. Mutual Funds and Risk: The answer that best describes the risk associated with mutual funds is: "Mutual funds offer moderate risk since they are composed of different types of assets that are diversified." This indicates that mutual funds typically have a diversified portfolio which can help to spread risk, though the level of risk can vary depending on the specific assets in the fund.

2. Capital Gain Calculation: To calculate the capital gain:

   • Purchase price per share: $5
   • Sale price per share: $6.50
   • Number of shares: 50

   Capital Gain = (Sale price - Purchase price) * Number of shares Capital Gain = ($6.50 - $5.00) * 50 = $1.50 * 50 = $75

   The correct response is: $75

3. Pros and Cons of Credit Cards vs. Lines of Credit: The statement that accurately reflects the characteristics of both types of credit services is: "Credit cards can be used at the point of sale, while lines of credit cannot. Lines of credit typically have a lower interest rate while credit cards typically have higher interest rates." This captures the general use and cost differences between the two.

4. Real GDP Calculation for 2020: Starting with the Real GDP of the economy at $250 million in 2019, we can adjust it for 2020 based on the changes outlined:

   • Increase in consumption: +$20 million
   • Decrease in investment: -$5 million
   • Increase in government spending: +$10 million
   • Decrease in exports: -$5 million
   • Increase in imports: -$15 million (imports count as negative)

   The adjustments can be summarized: New GDP = 250 + 20 - 5 + 10 - 5 - 15

   Calculating this: New GDP = 250 + 20 - 5 + 10 - 5 - 15 = 250 + 20 + 10 - 5 - 5 - 15 = 250 + 30 - 25 = 255 million dollars.

   The correct answer is: 255 million dollars

If you have any more questions or need further clarification, feel free to ask!