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

Answer:

The correct answer is letter "D": high rate of return; high risk; moderate liquidity.

Explanation:

When talking about returns on individual stock investments it is important to consider that usually, it takes a considerable period until that happens. That is to "secure" profits out of a trade. However, in the short term, the asset is very risky since stocks tend to fluctuate daily. For the transaction to be possible, there must be decent liquidity in the market so after entering a trade the investor will be able to exit the transaction since there will be another investor willing to pay for the shares at a set price.