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Stocks 103: Investing for the Long Run

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1.
Well-known stocks like General Motors _______.
Choose wisely. There is only one correct answer.
Can underperform the stock market. Just because a stock is well known does not mean it's a good investment. General Motors has often underperformed the stock market during the last 40 years.
2.
Stockholders have more exposure to the potential growth of a company than bondholders do.
Choose wisely. There is only one correct answer.
True. This is due to the fact that their returns are not fixed and can increase vastly.
3.
Who stands to reap the highest gains from the growth of a company?
Choose wisely. There is only one correct answer.
Stockholders. Bondholders will always get limited returns. Stockholders, however, can get returns that are potentially unlimited.
4.
Stocks are such winning investments that they have had the highest long-term returns of any type of investment.
Choose wisely. There is only one correct answer.
True. It is true, in fact.
5.
A very promising company is seeking investors. It is paying a 7% interest rate on its bonds, and it is also selling stock. Historically and statistically speaking, which would be the best bet for an investor?
Choose wisely. There is only one correct answer.
The stock. Although we cannot predict the future, the stock would statistically be the best bet. Still, it is best to study the company's financials before investing.