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"Education is the most powerful weapon which you can use to change the world”
– Nelson Mandela

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Unit 3 Challenges 3

Unit 3 Challenges 3

Q 1. Nigel is self-employed. He seeks funding to expand his business operations. What must Nigel do in order to sell shares in the business to raise funds? 2. The market price of Hudson-Day stock is $14 per share, and the formula for P/E ratio is as follows: P/E ratio = Stock price per share / Earnings per share. If the company's earnings per share is $2, what is their P/E ratio? 3. • Wesley is deciding between investing in stocks or bonds. Which of the following reasons would indicate that Wesley should invest more in stocks than in bonds? 4. Which of the following is true about the investment decisions for a mutual fund? 5. • Jayden is a school teacher nearing retirement. He has a moderate risk tolerance and plans to invest his retirement money in order to obtain profitable returns. He plans to use the money for his retirement and medical expenses. Which of the following investment options will best suit Jayden?

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1. Nigel must first convert the business structure to a corporation, which creates shares of ownership in the company. 2. To calculate the P/E ratio, we use the following formula: Stock price per share / Earnings per share = $14 / $2 = 7. 3. Bonds provide investors with a low-risk fixed income in the form of interest payments, while stocks might offer greater returns, but at a greater risk.