Chapter 01
The Investment Environment
Multiple Choice Questions
1. The material wealth of a society is a function of
A. all financial assets.
B. all real assets.
C. all financial and real assets.
D. all physical assets.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-01 Real Assets versus Financial Assets.
Topic: 01-01 Real Assets versus Financial Assets
2. _______ are real assets.
A. Land
B. Machines
C. Stocks and bonds
D. Knowledge
E. Land, machines, and knowledge
Land, machines and knowledge are real assets; stocks and bonds are financial assets.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-01 Real Assets versus Financial Assets.
Topic: 01-01 Real Assets versus Financial Assets
3. The means by which individuals hold their claims on real assets in a well-developed economy are
A. investment assets.
B. depository assets.
C. derivative assets.
D. financial assets.
E. exchange-driven assets.
Financial assets allocate the wealth of the economy. Example: it is easier for an individual to own shares of an auto company than to own an auto company directly.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-01 Real Assets versus Financial Assets.
Topic: 01-01 Real Assets versus Financial Assets
4. _______ are financial assets.
A. Bonds
B. Machines
C. Stocks
D. Bonds and stocks
E. Bonds, machines, and stocks
Machines are real assets; stocks and bonds are financial assets.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-01 Real Assets versus Financial Assets.
Topic: 01-01 Real Assets versus Financial Assets
5. _________ financial asset(s).
A. Buildings are
B. Land is a
C. Derivatives are
D. Canadian T-Bills are
E. Derivatives and Canadian bonds are
Buildings and land are real assets.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-01 Real Assets versus Financial Assets.
Topic: 01-01 Real Assets versus Financial Assets
6. Financial assets
A. directly contribute to the country's productive capacity.
B. indirectly contribute to the country's productive capacity.
C. contribute to the country's productive capacity, both directly and indirectly.
D. do not contribute to the country's productive capacity, either directly or indirectly.
E. are of no value to anyone.
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: Easy
Learning Objective: 01-01 Real Assets versus Financial Assets.
Topic: 01-01 Real Assets versus Financial Assets
7. A security that pays a specified cash flow over a specific period is called
A. fixed income.
B. stock option.
C. mutual fund.
D. real estate.
E. index.
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: Easy
Learning Objective: 01-02 Financial Assets.
Topic: 01-02 Financial Assets
8. _________ is a commodity.
A. Swap
B. Money
C. Gold
D. Future contract
E. Treasury-bill
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: Easy
Learning Objective: 01-02 Financial Assets.
Topic: 01-02 Financial Assets
9. Compared to investments in debt securities, equity investments tend to be
A. equally risky.
B. riskier.
C. less risky.
D. more important.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-02 Financial Assets.
Topic: 01-02 Financial Assets
10. Which one of the following is a not role of the financial markets?
A. Consumption timing
B. Information
C. Separation of ownership and control
The Investment Environment
Multiple Choice Questions
1. The material wealth of a society is a function of
A. all financial assets.
B. all real assets.
C. all financial and real assets.
D. all physical assets.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-01 Real Assets versus Financial Assets.
Topic: 01-01 Real Assets versus Financial Assets
2. _______ are real assets.
A. Land
B. Machines
C. Stocks and bonds
D. Knowledge
E. Land, machines, and knowledge
Land, machines and knowledge are real assets; stocks and bonds are financial assets.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-01 Real Assets versus Financial Assets.
Topic: 01-01 Real Assets versus Financial Assets
3. The means by which individuals hold their claims on real assets in a well-developed economy are
A. investment assets.
B. depository assets.
C. derivative assets.
D. financial assets.
E. exchange-driven assets.
Financial assets allocate the wealth of the economy. Example: it is easier for an individual to own shares of an auto company than to own an auto company directly.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-01 Real Assets versus Financial Assets.
Topic: 01-01 Real Assets versus Financial Assets
4. _______ are financial assets.
A. Bonds
B. Machines
C. Stocks
D. Bonds and stocks
E. Bonds, machines, and stocks
Machines are real assets; stocks and bonds are financial assets.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-01 Real Assets versus Financial Assets.
Topic: 01-01 Real Assets versus Financial Assets
5. _________ financial asset(s).
A. Buildings are
B. Land is a
C. Derivatives are
D. Canadian T-Bills are
E. Derivatives and Canadian bonds are
Buildings and land are real assets.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-01 Real Assets versus Financial Assets.
Topic: 01-01 Real Assets versus Financial Assets
6. Financial assets
A. directly contribute to the country's productive capacity.
B. indirectly contribute to the country's productive capacity.
C. contribute to the country's productive capacity, both directly and indirectly.
D. do not contribute to the country's productive capacity, either directly or indirectly.
E. are of no value to anyone.
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: Easy
Learning Objective: 01-01 Real Assets versus Financial Assets.
Topic: 01-01 Real Assets versus Financial Assets
7. A security that pays a specified cash flow over a specific period is called
A. fixed income.
B. stock option.
C. mutual fund.
D. real estate.
E. index.
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: Easy
Learning Objective: 01-02 Financial Assets.
Topic: 01-02 Financial Assets
8. _________ is a commodity.
A. Swap
B. Money
C. Gold
D. Future contract
E. Treasury-bill
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: Easy
Learning Objective: 01-02 Financial Assets.
Topic: 01-02 Financial Assets
9. Compared to investments in debt securities, equity investments tend to be
A. equally risky.
B. riskier.
C. less risky.
D. more important.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-02 Financial Assets.
Topic: 01-02 Financial Assets
10. Which one of the following is a not role of the financial markets?
A. Consumption timing
B. Information
C. Separation of ownership and control