Question 1

Stock markets often experience a frenzy of buying or selling when investors are ___________________ by following the current trend in a very actively traded company.

Accepted Answer

A)   momentum trading
B)   trading on fundamentals
C)   diversifying their portfolios
D)   decreasing investment yields

Question 2

The bottom line on investing in individual stocks is: _______________ on average over lengthy periods of time; ________________, especially in the short run; _______________, since stock does need to be sold to turn gains into spendable money.

Accepted Answer

A)   low rate of return; high risk; low liquidity
B)   moderate rate of return; low risk; high liquidity
C)   high rate of return; moderate risk; low liquidity
D)   high rate of return; high risk; moderate liquidity

Question 3

In the investment industry, the principle of _______________ supports investing in a wide range of companies to reduce the level of risk.

Accepted Answer

A)   subprime loans
B)   diversification
C)   fundamentals trading
D)   buying low and selling high

Question 4

A mutual fund that seeks to imitate the overall behaviour of the stock market is called ____________________ .

Accepted Answer

A)   a long-run collectibles fund
B)   an index fund
C)   a mortgage-backed securities fund
D)   an indexed retirement age fund

Question 5

In order to be classified as a _______________, a firm must be owned by the people who run it on a day-to-day basis.

Accepted Answer

A)   business firm
B)   public company
C)   private company
D)   corporation

Question 6

Which of the following is a feature that typically distinguishes a savings account from a checking account?

Accepted Answer

A)   pays interest
B)   less liquidity
C)   automatic teller machine access is available for checking accounts
D)   withdrawals require a trip to the bank by the account holder

Question 7

Briefly describe what is meant by the term "diversification" with respect to the investment industry. Identify and briefly explain two investment vehicles that offer investors a convenient way to diversify their investments.

Accepted Answer

In the investment industry, diversifica...

Question 8

Which of the following would be the least likely method for firms to raise the financial capital they need to pay for new equipment?

Accepted Answer

A)   issuing bonds
B)   reinvesting profits
C)   borrowing from households
D)   selling stock

Question 9

Which of the following is not an ironclad rule in the financial markets?

Accepted Answer

A)   borrowing from a bank works better for large, well-known corporations
B)   banks fund small business loans and large firms issue bonds to raise money
C)   a bank can monitor a large established firm's better than a new small business
D)   relatively large and well-known firms typically never borrow from banks

Question 10

How has the widespread adoption of debit cards as the preferred method of payment for consumer purchases likely affected bank administration costs?

Accepted Answer

A)   the cost of bank administration is unaffected by widespread use of debit cards
B)   costs increased due to high cost of developing and maintaining debit card technology
C)   administration costs increased because the cost of electricity means high-cost for electronic transactions
D)   costs are reduced because the cost of purchase is immediately debited from purchaser's checking account

Question 11

A ________________ operates directly between a saver with financial assets to invest and an entity who will receive those assets in exchange for paying a ________________ .

Accepted Answer

A)   public company; higher rate of interest
B)   financial intermediary; rate of return
C)   private company; higher rate of interest
D)   stock market; rate of return

Question 12

The old proverb: "Don't put all your eggs in one basket" is synonymous with which of the following?

Accepted Answer

A)   an average rate of return
B)   predicting value of tangible assets
C)   diversified investments
D)   a flexible rate of return

Question 13

List the four main methods available to a textile manufacturer that needs to raise the financial capital they need to pay for the purchase and installation of solar panel equipment to generate electricity to run its large, existing textile plant.

Accepted Answer

The textile manufacturer can raise the f...

Question 14

________________ are a form of _______ bonds that offer relatively high interest rates to compensate for their relatively high chance of default.

Accepted Answer

A)   Bonds; government
B)   High-yield bonds; municipal
C)   Junk bonds; corporate
D)   Certificates of deposit; bank

Question 15

The City of Washington needs to upgrade its levies and its water drainage systems. The cost will exceed the amount of tax revenue the City expects to receive over the next 10 years. How will the City be able to raise the funds needed to finance this upgrade?

Accepted Answer

A)   issue Treasury Bonds
B)   issue municipal bonds
C)   borrow from Banks
D)   borrow from large corporations

Question 16

The ownership in a company is represented by ________________ and those who are legally recognized as having ownership in a company are called _____________.

Accepted Answer

A)   ownership of the shares with voting rights; shareholders
B)   shares with voting rights; stockholders
C)   ownership of stock; stockholders
D)   ownership of shares in the company's stock; shareholders

Question 17

Michael purchased 5,000 shares of IMAGoldMiner Inc. in May for $0.55 each. He purchased 5,000 more at $0.75 cents in June and another 5,000 for $1.02 in July. In October, IMAGoldMiner began production at its new gold mine and Michael was able to sell 5,000 shares at $2.05, another 5,000 at $3.25 and the remaining 5000 at $4.50. In this instance, Michael

Accepted Answer

A)   is trading on fundamentals.
B)   profited by momentum trading.
C)   is diversifying his investments.
D)   traded based on future expected profits.

Question 18

Riley and Sue paid 30% down for a house valued at $135,000 in 2013. If they sell the house in 2017 for $140,000, what will the value of their equity be?

Accepted Answer

A)   $40,500
B)   $35,500
C)   $45,500
D)   $5,000

Question 19

Treasury bonds are issued by the federal government through the _____________________ .

Accepted Answer

A)   Federal Reserve
B)   Central Bank
C)   U.S. Department of the Treasury
D)   U.S. Office of the Comptroller of Currency

Question 20

Briefly discuss how the price of a company's stock will be determined. Briefly describe the two main motivations for purchasing stock and indentify which of these motivations will have the greatest effect on the market.

Accepted Answer

The price of a company’s stock will be d...

Exam 17: Financial Markets

In the investment industry, the principle of _______________ supports investing in a wide range of companies to reduce the level of risk.

Correct Answer
verified

Correct Answer
verified

How has the widespread adoption of debit cards as the preferred method of payment for consumer purchases likely affected bank administration costs?

Correct Answer
verified

Which of the following would be the least likely method for firms to raise the financial capital they need to pay for new equipment?

Correct Answer
verified

__________ are a form of _ bonds that offer relatively high interest rates to compensate for their relatively high chance of default.

Correct Answer
verified

Riley and Sue paid 30% down for a house valued at $135,000 in 2013. If they sell the house in 2017 for $140,000, what will the value of their equity be?

Correct Answer
verified

Stock markets often experience a frenzy of buying or selling when investors are ___________________ by following the current trend in a very actively traded company.

Correct Answer
verified

A mutual fund that seeks to imitate the overall behaviour of the stock market is called ____________________ .

Correct Answer
verified

The ownership in a company is represented by ____ and those who are legally recognized as having ownership in a company are called _.

Correct Answer
verified

Which of the following is not an ironclad rule in the financial markets?

Correct Answer
verified

The City of Washington needs to upgrade its levies and its water drainage systems. The cost will exceed the amount of tax revenue the City expects to receive over the next 10 years. How will the City be able to raise the funds needed to finance this upgrade?

Correct Answer
verified

List the four main methods available to a textile manufacturer that needs to raise the financial capital they need to pay for the purchase and installation of solar panel equipment to generate electricity to run its large, existing textile plant.

Correct Answer
verified
The textile manufacturer can raise the f...
View Answer

Briefly discuss how the price of a company's stock will be determined. Briefly describe the two main motivations for purchasing stock and indentify which of these motivations will have the greatest effect on the market.

Correct Answer
verified
The price of a company’s stock will be d...
View Answer

Treasury bonds are issued by the federal government through the _____________________ .

Correct Answer
verified

A operates directly between a saver with financial assets to invest and an entity who will receive those assets in exchange for paying a .

Correct Answer
verified

Which of the following is a feature that typically distinguishes a savings account from a checking account?

Correct Answer
verified

The old proverb: "Don't put all your eggs in one basket" is synonymous with which of the following?

Correct Answer
verified

Briefly describe what is meant by the term "diversification" with respect to the investment industry. Identify and briefly explain two investment vehicles that offer investors a convenient way to diversify their investments.

Correct Answer
verified
In the investment industry, diversifica...
View Answer

The bottom line on investing in individual stocks is: _ on average over lengthy periods of time; , especially in the short run; _, since stock does need to be sold to turn gains into spendable money.

Correct Answer
verified

In order to be classified as a _______________, a firm must be owned by the people who run it on a day-to-day basis.

Correct Answer
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Exam 17: Financial Markets

In the investment industry, the principle of _______________ supports investing in a wide range of companies to reduce the level of risk.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

How has the widespread adoption of debit cards as the preferred method of payment for consumer purchases likely affected bank administration costs?

Correct AnswerverifiedShow Answer

Which of the following would be the least likely method for firms to raise the financial capital they need to pay for new equipment?

Correct AnswerverifiedShow Answer

________________ are a form of _______ bonds that offer relatively high interest rates to compensate for their relatively high chance of default.

Correct AnswerverifiedShow Answer

Riley and Sue paid 30% down for a house valued at $135,000 in 2013. If they sell the house in 2017 for $140,000, what will the value of their equity be?

Correct AnswerverifiedShow Answer

Stock markets often experience a frenzy of buying or selling when investors are ___________________ by following the current trend in a very actively traded company.

Correct AnswerverifiedShow Answer

A mutual fund that seeks to imitate the overall behaviour of the stock market is called ____________________ .

Correct AnswerverifiedShow Answer

The ownership in a company is represented by ________________ and those who are legally recognized as having ownership in a company are called _____________.

Correct AnswerverifiedShow Answer

Which of the following is not an ironclad rule in the financial markets?

Correct AnswerverifiedShow Answer

The City of Washington needs to upgrade its levies and its water drainage systems. The cost will exceed the amount of tax revenue the City expects to receive over the next 10 years. How will the City be able to raise the funds needed to finance this upgrade?

Correct AnswerverifiedShow Answer

List the four main methods available to a textile manufacturer that needs to raise the financial capital they need to pay for the purchase and installation of solar panel equipment to generate electricity to run its large, existing textile plant.

Correct AnswerverifiedThe textile manufacturer can raise the f...View AnswerShow Answer

Briefly discuss how the price of a company's stock will be determined. Briefly describe the two main motivations for purchasing stock and indentify which of these motivations will have the greatest effect on the market.

Correct AnswerverifiedThe price of a company’s stock will be d...View AnswerShow Answer

Treasury bonds are issued by the federal government through the _____________________ .

Correct AnswerverifiedShow Answer

A ________________ operates directly between a saver with financial assets to invest and an entity who will receive those assets in exchange for paying a ________________ .

Correct AnswerverifiedShow Answer

Which of the following is a feature that typically distinguishes a savings account from a checking account?

Correct AnswerverifiedShow Answer

The old proverb: "Don't put all your eggs in one basket" is synonymous with which of the following?

Correct AnswerverifiedShow Answer

Briefly describe what is meant by the term "diversification" with respect to the investment industry. Identify and briefly explain two investment vehicles that offer investors a convenient way to diversify their investments.

Correct Answerverified In the investment industry, diversifica...View AnswerShow Answer

The bottom line on investing in individual stocks is: _______________ on average over lengthy periods of time; ________________, especially in the short run; _______________, since stock does need to be sold to turn gains into spendable money.

Correct AnswerverifiedShow Answer

In order to be classified as a _______________, a firm must be owned by the people who run it on a day-to-day basis.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

__________ are a form of _ bonds that offer relatively high interest rates to compensate for their relatively high chance of default.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The ownership in a company is represented by ____ and those who are legally recognized as having ownership in a company are called _.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The textile manufacturer can raise the f...
View Answer

Correct Answer
verified
The price of a company’s stock will be d...
View Answer

Correct Answer
verified

A operates directly between a saver with financial assets to invest and an entity who will receive those assets in exchange for paying a .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
In the investment industry, diversifica...
View Answer

The bottom line on investing in individual stocks is: _ on average over lengthy periods of time; , especially in the short run; _, since stock does need to be sold to turn gains into spendable money.

Correct Answer
verified

Correct Answer
verified