SIE (Securities Industry Essentials) Practice Exam

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Which stock can be expected to rise rapidly during a period of economic expansion?

  1. Value stock

  2. Growth stock

  3. Bond-equivalent stock

  4. Dividend stock

The correct answer is: Growth stock

During economic expansion, companies are experiencing growth and generating revenue at a faster rate. This makes B Growth stock a more favorable option as these stocks are typically from companies with a strong potential for growth, such as in emerging industries or those with high technological advancements. On the other hand, A: Value stock may not experience the same rapid growth as they are typically from established and stable companies. C: Bond-equivalent stock may not be as attractive during economic expansion as they offer fixed interest payments and may not see much price appreciation. D: Dividend stock may also not rise rapidly during this period as they typically offer stable but slow growth.

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