Investigation #3
The financial advisor from Sylvester's bank suggests a mutual fund that holds a number of popular stocks and gives him an investment report on the fund. Sylvester's boss also offers to sell him company stock at a low price if he buys it within three months. After some thought, Sylvester buys $1,000 worth of Internet stock, $1,500 worth of blue chip stocks and $800 worth of stock in a promising new sportswear company that reinvests its earnings in new growth. He keeps the remaining $750 to buy company stock from his boss. Finally he sits back and hopes for a bull market.
1. Which of the stocks Sylvester bought probably trades in the OTC? On the NYSE?
2. For which investment does Sylvester receive a prospectus? A stock option?
3. Which stock will Sylvester expect capital gains rather than dividends?
4. Why would Sylvester hope for a bull market?