AC60 Financial Markets Diagnostic Quiz

_______ a network of savers, investors, financial assets, and financial institutions that work together to transfer savings to investment uses

• secondary market

• primary market

• financial system

• capital market

Institutions such as banks that collect funds from savers that can be loaned to borrowers are known as

• financial intermediaries

• financial assets

• dividends

• Credit Unions

What is the main difference between Treasury bonds, Treasury notes, and Treasury bills?

• the amount of time for maturity

• the interest rate

• the minimum purchase requirement

• the method of sale

Below are all types of return except:

• Actual return

• Expected return

• Possible return

• Required return

Which of the following statements about risk is TRUE?

• Risk is about how uncertain your returns could be.
• Risk is about how much money you can lose.
• A risky asset is more likely to deliver higher return than a less risky asset.
• If an asset's risk increases, its price will also increase.

Plunging oil prices is an example of which of the following types of investment risk?

• company risk

• industry risk

• political risk

• inflation risk

Long-term bonds are ... than short-term bonds.

• more liquid

• less risky

• less sensitive to interest rate changes

• subject to more uncertainty

What is a bond?

• an agreement or friendship

• binding security

• something that binds, fastens, confines, or holds together

• a type of debt a company issues to investors

Which one of the following types of securities has no priority in a bankruptcy proceeding?

• Convertible bond

  
  

  
  

• Senior debt

• Common stock

• Preferred stock

• Straight bond

Kate could not attend the last shareholders meeting and thus she granted the authority to vote on her behalf to the managers of the firm. Which one of the following terms is used to describe the method by which Kate's shares were voted?

• Straight

• Cumulative

• Consent-form

• Proxy

• In absentia