Question

The bottom line on investing in individual stocks is: __________ on average over lengthy periods of time; ___________, especially in the short run; ___________, since stock does need to be sold to turn gains into spendable money. a. low rate of return; high risk; low liquidityb. moderate rate of return; low risk; high liquidityc. high rate of return; moderate risk; low liquidityd. high rate of return; high risk; moderate liquidity

Answer 1

d. high rate of return; high risk; moderate liquidity

The bottom line on investing in individual stocks is: high rate of return on average over lengthy periods of time; high risk, especially in the short run; moderate liquidity*, since stock does need to be sold to turn gains into spendable money.

*Stocks are very liquid investments.

Step-by-step explanation:

In the long run, holding stocks should be very profitable since the price of stocks tends to increase in time. On the short run stocks carry a very high risk since the price of stocks varies every day and during some periods of time stock might lose a lot of their value before bouncing back. Stocks are very liquid investments since they can easily be converted into cash, it takes only a couple of days to do it. But most investors should try to hold on to stocks for the longest time possible since money, so even a moderate liquidity would serve.