Chapter 11 - Financial Markets

Certificates of deposits (CDs) are a common investment because they:

• are issued and insured by commercial banks

• require only a small investment and have various maturity rates

• are issued and insured by the U.S. government

• require only a small investment and pay high interest rates at maturity

Who issues tax exempt municipal bonds?

• state and local governments

• local commercial banks

• local credit unions

• federal and state governments

A money market investment is based on _________.

• which markets the money is invested in

• length of time the money is loaned

• the risk of the investment

• amount of money loaned

Three ways people can save money with little risk include _____________.

• have a savings account, buying certificates of deposit, buying stock

• buying an insurance policy, contributing to a finance company, buying CDs

• have a savings account, buying certificates of deposit, buying an insurance policy

• buying an insurance policy, contributing to a pension fund, buying stock

Investment analysts recommend people to make investments in ___________

• financial investments they understand

• financial investments that are financially complicated

• financial investments recommended to them by friends

• financial investments that promise the highest returns

When making a risky investment, investors usually demand a ____________.

• higher selling price

• lower compensation

• higher compensation

• lower purchasing price

How can investors purchase equities?

• They can buy a 401(k) plan through a bank.

• They can buy futures in corporate bonds.

• They can buy them directly on the internet.

• They have to use a stockbroker.

Which of the following terms describes a strong stock market?

• bear market

• bull market

• futures market

• spot market

Which type of financial organization is a nonprofit service cooperative?

• commercial bank

• credit union

• insurance company

• mutual fund

Which of the following financial organizations specializes in buying installment contracts from merchants who sell on credit?

• a credit union

• a finance company

• a bank

• an insurance company