TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
1) A non- interest- bearing chequing account is still considered an investment.
Answer: True False
2) Land and buildings are examples of real property investments.
Answer: True False
3) Securities are investments issued by firms, governments, or other organizations that represent a financial claim on the
issuer's resources.
Answer: True False
4) A Government of Canada bond is an example of a debt security.
Answer: True False
5) Most sources of investment information are in print format, expensive, and difficult to access.
Answer: True False
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
6) Which of the following is NOT an investment as defined in the text?
A) a Government of Canada bond B) a new automobile
C) a certificate of deposit issued by a bank D) a mutual fund held in a retirement account
Answer: B
7) Stocks are a(n) ________ investment representing ________ of a business.
A) direct; ownership B) direct; debt
C) indirect; debt D) indirect; ownership
Answer: A
8) An exchange traded fund that invests in the stocks of large corporations is an example of
A) indirect investment. B) tangible investment.
C) direct investment. D) derivative investment.
Answer: A
9) Which of the following has declined in both the US and Canada in recent years?
A) the percentage of foreign stocks held in typical portfolios
B) direct ownership of stock by individual investors
C) the timeliness of information available to investors
D) institutional ownership of common stocks
Answer: B
10) Which of the following has increased in both the US and Canada in recent years?
A) institutional ownership of common stocks
B) indirect ownership of stocks through mutual funds and ETFs.
C) the percentage of domestic stocks held in typical portfolios
D) direct ownership of stock by individual investors
Answer: B
11) Debt represents funds loaned in exchange for
A) dividend income and an ownership interest in the firm.
B) interest income and the repayment of the loan principal.
C) dividend income and the repayment of the loan principal.
D) interest income and a partial ownership interest in the firm.
Answer: B
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
12) Institutional investors manage money for businesses and nonprofit organizations, but not for individuals.
Answer: True False
13) Institutional investors are individuals who invest indirectly through financial institutions.
Answer: True False
14) Banks and insurance companies are examples of institutional investors.
Answer: True False
15) In the financial markets, individuals are net suppliers of funds.
Answer: True False
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
16) The government is generally
A) the owner of the financial market. B) not involved in the financial market.
C) a supplier of funds to the financial market. D) a demander of funds in the financial market.
Answer: D
17) On a net basis, funds in the financial markets are generally supplied by
A) both individuals and business firms. B) business firms.
C) the government. D) individuals.
Answer: D
18) Stocks of large publicly traded companies
A) are rarely traded. B) rarely decline in value.
C) are illiquid. D) are highly liquid.
Answer: D
19) Which of the following are true concerning institutional investors?
I. Institutional investors are professionals who manage money for other people.
II. Banks, insurance companies and mutual funds are all institutional investors.
III. Institutional investors are individuals who invest indirectly through financial institutions.
IV. Institutional investors invest large sums of money.
A) I and II only B) I, II and IV only C) II, III and IV only D) I, II, III and IV
Answer: B
20) Which of the following is NOT traded in the securities markets?
A) bonds B) derivatives C) stocks D) real estate
Answer: D
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
21) Describe the major differences between individual and institutional investors.
Answer: Individual investors manage their own funds to achieve individual goals such as increasing financial
security or financing a comfortable retirement. Institutional investors, such as mutual funds and
insurance companies, manage funds for individuals who lack the time or expertise to invest
individually and for other institutions such as universities or charities.
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
1) A non- interest- bearing chequing account is still considered an investment.
Answer: True False
2) Land and buildings are examples of real property investments.
Answer: True False
3) Securities are investments issued by firms, governments, or other organizations that represent a financial claim on the
issuer's resources.
Answer: True False
4) A Government of Canada bond is an example of a debt security.
Answer: True False
5) Most sources of investment information are in print format, expensive, and difficult to access.
Answer: True False
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
6) Which of the following is NOT an investment as defined in the text?
A) a Government of Canada bond B) a new automobile
C) a certificate of deposit issued by a bank D) a mutual fund held in a retirement account
Answer: B
7) Stocks are a(n) ________ investment representing ________ of a business.
A) direct; ownership B) direct; debt
C) indirect; debt D) indirect; ownership
Answer: A
8) An exchange traded fund that invests in the stocks of large corporations is an example of
A) indirect investment. B) tangible investment.
C) direct investment. D) derivative investment.
Answer: A
9) Which of the following has declined in both the US and Canada in recent years?
A) the percentage of foreign stocks held in typical portfolios
B) direct ownership of stock by individual investors
C) the timeliness of information available to investors
D) institutional ownership of common stocks
Answer: B
10) Which of the following has increased in both the US and Canada in recent years?
A) institutional ownership of common stocks
B) indirect ownership of stocks through mutual funds and ETFs.
C) the percentage of domestic stocks held in typical portfolios
D) direct ownership of stock by individual investors
Answer: B
11) Debt represents funds loaned in exchange for
A) dividend income and an ownership interest in the firm.
B) interest income and the repayment of the loan principal.
C) dividend income and the repayment of the loan principal.
D) interest income and a partial ownership interest in the firm.
Answer: B
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
12) Institutional investors manage money for businesses and nonprofit organizations, but not for individuals.
Answer: True False
13) Institutional investors are individuals who invest indirectly through financial institutions.
Answer: True False
14) Banks and insurance companies are examples of institutional investors.
Answer: True False
15) In the financial markets, individuals are net suppliers of funds.
Answer: True False
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
16) The government is generally
A) the owner of the financial market. B) not involved in the financial market.
C) a supplier of funds to the financial market. D) a demander of funds in the financial market.
Answer: D
17) On a net basis, funds in the financial markets are generally supplied by
A) both individuals and business firms. B) business firms.
C) the government. D) individuals.
Answer: D
18) Stocks of large publicly traded companies
A) are rarely traded. B) rarely decline in value.
C) are illiquid. D) are highly liquid.
Answer: D
19) Which of the following are true concerning institutional investors?
I. Institutional investors are professionals who manage money for other people.
II. Banks, insurance companies and mutual funds are all institutional investors.
III. Institutional investors are individuals who invest indirectly through financial institutions.
IV. Institutional investors invest large sums of money.
A) I and II only B) I, II and IV only C) II, III and IV only D) I, II, III and IV
Answer: B
20) Which of the following is NOT traded in the securities markets?
A) bonds B) derivatives C) stocks D) real estate
Answer: D
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
21) Describe the major differences between individual and institutional investors.
Answer: Individual investors manage their own funds to achieve individual goals such as increasing financial
security or financing a comfortable retirement. Institutional investors, such as mutual funds and
insurance companies, manage funds for individuals who lack the time or expertise to invest
individually and for other institutions such as universities or charities.
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.