1. 1. Financial institutions in the U.S. economy Suppose Clinton decides to use $5,500 currently held
as savings to make a financial investment. One method of making a financial investment is the
purchase of stock or bonds from a private company. Suppose Warm Breeze, a cloud computing
firm, is selling stocks to raise money for a new lab. This practice is called finance. Buying a share
of Warm Breeze stock would give Clinton the firm. In the event that Warm Breeze runs into
financial difficulty, will be paid first. Suppose Clinton chooses to buy 250 shares of Warm Breeze
stock. Which of the following statements are correct? Check all that apply. An increase in the
perceived profitability of Warm Breeze will likely cause the value of Clinton's shares to rise.
Expectations of a recession that will reduce economywide corporate profits will likely cause the
value of Clinton's shares to decline. Warm Breeze earns revenue when Clinton purchases 250
shares, even if he purchases them from an existing shareholder. Alternatively, Clinton could
undertake their financial investment by purchasing bonds issued by the U.S. government.
Assuming that everything else is equal, a corporate bond issued by an electronics manufacturer
most likely pays a interest rate than a municipal bond issued by a state.