An investor can make money on a common stock investment by
A)waiting for the corporation to repurchase the stock.
B)waiting for the stock's value to increase and then selling it.
C)waiting for the stock's value to decrease and then selling it.
D)waiting for the stock to reach the maturity date.
E)converting the common stock to preferred stock.

Question

Quizplus · Accepted Answer

Investors can make money on a common stock investment by buying the stock at a lower price and then waiting for the stock's value to increase before selling it at a higher price. This is known as capital appreciation. Waiting for the corporation to repurchase the stock (A) typically results in a lower return than selling at market value. Similarly, waiting for the stock's value to decrease and then selling it (C) results in a loss. Common stocks do not have a maturity date (D) like bonds or other fixed-income securities. Finally, converting common stock to preferred stock (E) may provide a higher dividend but does not necessarily result in capital appreciation.

An Investor Can Make Money on a Common Stock Investment