Chapter 01
The Investment Environment
Multiple Choice Questions
1. In 2007, ____________ was the most significant real asset of U.S. households in terms of total value.
A. consumer durables
B. automobiles
C. real estate
D. mutual fund shares
E. bank loans
See Table 1.1.
Difficulty: Easy
2. In 2007, ____________ was the least significant financial asset of U.S. households in terms of total value.
A. real estate
B. mutual fund shares
C. debt securities
D. life insurance reserves
E. pension reserves
See Table 1.1.
Difficulty: Easy
3. In 2007, ____________ was the most significant asset of U.S. households in terms of total value.
A. real estate
B. mutual fund shares
C. debt securities
D. life insurance reserves
E. pension reserves
See Table 1.1.
Difficulty: Easy
4. In 2007, ____________ was the most significant liability of U.S. households in terms of total value.
A. credit cards
B. mortgages
C. bank loans
D. student loans
E. other debt
See Table 1.1.
Difficulty: Easy
5. The largest component of domestic net worth in 2007 was ____________.
A. non-residential real estate
B. residential real estate
C. inventories
D. consumer durables
E. equipment and software
See Table 1.2.
Difficulty: Moderate
6. In 2007, ____________ was the most significant real asset of U.S. nonfinancial businesses in terms of total value.
A. equipment and software
B. inventory
C. real estate
D. trade credit
E. marketable securities
See Table 1.4.
Difficulty: Easy
7. In 2007, ____________ was the least significant real asset of U.S. nonfinancial businesses in terms of total value.
A. equipment and software
B. inventory
C. real estate
D. trade credit
E. marketable securities
See Table 1.4.
Difficulty: Easy
8. In 2007, ____________ was the least significant liability of U.S. nonfinancial businesses in terms of total value.
A. bonds and mortgages
B. bank loans
C. inventories
D. trade debt
E. marketable securities
See Table 1.4.
Difficulty: Easy
9. In terms of total value, the most significant liability of U.S. nonfinancial businesses in 2007 was _______.
A. bank loans
B. bonds and mortgages
C. trade debt
D. other loans
E. marketable securities.
See Table 1.4.
Difficulty: Easy
10. In 2007, ____________ was the most significant financial asset of U.S. nonfinancial businesses in terms of total value.
A. cash
B. trade credit
C. trade debt
D. inventory
E. marketable securities
See Table 1.4.
Difficulty: Easy
11. The material wealth of a society is equal to the sum of _________.
A. all financial assets
B. all real assets
C. all financial and real assets
D. all physical assets
E. none of the above
Financial assets do not directly contribute the productive capacity of the economy.
Difficulty: Easy
12. ____________ of an investment bank.
A. Citigroup is an example
B. Merrill Lynch is an example
C. Goldman is an example
D. B and C are each examples
E. Each of the above is an example
Merrill Lynch, Citigroup, and Goldman are all examples of investment banks.
Difficulty: Easy
13. _______ are financial assets.
A. Bonds
B. Machines
C. Stocks
D. A and C
E. A, B and C
Machines are real assets; stocks and bonds are financial assets.
Difficulty: Easy
14. An example of a derivative security is ______.
A. a common share of General Motors
B. a call option on Mobil stock
The Investment Environment
Multiple Choice Questions
1. In 2007, ____________ was the most significant real asset of U.S. households in terms of total value.
A. consumer durables
B. automobiles
C. real estate
D. mutual fund shares
E. bank loans
See Table 1.1.
Difficulty: Easy
2. In 2007, ____________ was the least significant financial asset of U.S. households in terms of total value.
A. real estate
B. mutual fund shares
C. debt securities
D. life insurance reserves
E. pension reserves
See Table 1.1.
Difficulty: Easy
3. In 2007, ____________ was the most significant asset of U.S. households in terms of total value.
A. real estate
B. mutual fund shares
C. debt securities
D. life insurance reserves
E. pension reserves
See Table 1.1.
Difficulty: Easy
4. In 2007, ____________ was the most significant liability of U.S. households in terms of total value.
A. credit cards
B. mortgages
C. bank loans
D. student loans
E. other debt
See Table 1.1.
Difficulty: Easy
5. The largest component of domestic net worth in 2007 was ____________.
A. non-residential real estate
B. residential real estate
C. inventories
D. consumer durables
E. equipment and software
See Table 1.2.
Difficulty: Moderate
6. In 2007, ____________ was the most significant real asset of U.S. nonfinancial businesses in terms of total value.
A. equipment and software
B. inventory
C. real estate
D. trade credit
E. marketable securities
See Table 1.4.
Difficulty: Easy
7. In 2007, ____________ was the least significant real asset of U.S. nonfinancial businesses in terms of total value.
A. equipment and software
B. inventory
C. real estate
D. trade credit
E. marketable securities
See Table 1.4.
Difficulty: Easy
8. In 2007, ____________ was the least significant liability of U.S. nonfinancial businesses in terms of total value.
A. bonds and mortgages
B. bank loans
C. inventories
D. trade debt
E. marketable securities
See Table 1.4.
Difficulty: Easy
9. In terms of total value, the most significant liability of U.S. nonfinancial businesses in 2007 was _______.
A. bank loans
B. bonds and mortgages
C. trade debt
D. other loans
E. marketable securities.
See Table 1.4.
Difficulty: Easy
10. In 2007, ____________ was the most significant financial asset of U.S. nonfinancial businesses in terms of total value.
A. cash
B. trade credit
C. trade debt
D. inventory
E. marketable securities
See Table 1.4.
Difficulty: Easy
11. The material wealth of a society is equal to the sum of _________.
A. all financial assets
B. all real assets
C. all financial and real assets
D. all physical assets
E. none of the above
Financial assets do not directly contribute the productive capacity of the economy.
Difficulty: Easy
12. ____________ of an investment bank.
A. Citigroup is an example
B. Merrill Lynch is an example
C. Goldman is an example
D. B and C are each examples
E. Each of the above is an example
Merrill Lynch, Citigroup, and Goldman are all examples of investment banks.
Difficulty: Easy
13. _______ are financial assets.
A. Bonds
B. Machines
C. Stocks
D. A and C
E. A, B and C
Machines are real assets; stocks and bonds are financial assets.
Difficulty: Easy
14. An example of a derivative security is ______.
A. a common share of General Motors
B. a call option on Mobil stock