The Investment Environment

Which of the following is NOT an investment as defined in the text?

• a certificate of deposit issued by a bank

• a new automobile

• bonds

• mutual funds

Stocks are a(n) ________ investment representing ________ of a business.

• direct; ownership

• direct; debt

• indirect; ownership

• indirect; debt

An exchange traded fund that invests in the stocks of large corporations is an example of ________

• direct investment

• indirect investment

• derivative investment

• tangible investment

Debt represents funds loaned in exchange for _________

• dividend income and the repayment of the loan principal

• dividend income and an ownership interest in the firm

• interest income and a partial ownership interest in the firm

• interest income and the repayment of the loan principal.

Stock represents for ________

• dividend income and the repayment of the loan principal

• dividend income and an ownership interest in the firm

• interest income and a partial ownership interest in the firm

• interest income and the repayment of the loan principal.

The government is generally ________

• not involved in the financial markets.

• the owner of the financial market.

• a supplier of funds to the financial market.

• a demander of funds in the financial market.

On a net basis, funds in the financial markets are generally supplied by ________

• individuals

• both individual and business firms

• business firms

• the government

A forum in which suppliers and demanders of funds make financial transactions is called a financial ________

• institution

• bank

• instrument

• market

Which of the following are traded in securities market?

• stocks

• bonds

• derivatives

• all of the above

Which of the following is an example of a tangible asset?

• bonds

• mutual funds

• real estate

• stocks