Deborah recently purchased a stock that is considerably more risky than a typical stock.It has exhibited a high degree of earnings variability.This is an example of a(n)________ stock.

Question

Quizplus · Accepted Answer

Speculative stocks are known for their high risk factor with the potential for high returns. They are usually associated with companies that are in their early stages of development or with companies that are experiencing financial difficulties. The high earnings variability mentioned in the question is a characteristic of speculative stocks. Blue-chip stocks, in contrast, are known for their stable earnings and low risk, while income stocks provide a regular stream of dividend income. Mid-cap stocks are stocks with a market capitalization between $2 billion and $10 billion and may have varying degrees of risk and earnings variability.

Deborah Recently Purchased a Stock That Is Considerably More Risky