Suppose Rajiv would like to use $10,000 of his savings to make a financial investment. One way of making a financial investment is to purchase stock or bonds from a private company. Suppose RoboTroid, a robotics firm, is selling stocks to raise money for a new lab—a practice known as equity finance. Buying a share of RoboTroid stock would give Rajiva claim to partial ownership in the firm. In the event that RoboTroid runs into financial difficulty, the bondholders will be paid first.
Suppose Rajiv decides to buy 100 shares of RoboTroid stock. Which of the following statements are correct? Check all that apply.
a) The Dow Jones Industrial Average is an example of a stock exchange where he can purchase RoboTroid stock.
b) The price of his shares will rise if RoboTroid issues additional shares of stock.
c) An increase in the perceived profitability of RoboTroid will likely cause the value of Rajiv's shares to rise.
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