chapter 11 econ quiz

Investment is the act of

• depositing money in a savings account.

• redirecting resources from being used today so they can create future benefits.

• using resources for current needs.

• developing new products.

A financial system brings together

• savers and borrowers.

• savers and consumers.

• banks and mutual funds.

• governments and businesses.

The purpose of a financial intermediary is to help channel funds

• from one bank to another.

• from saving bonds to building projects.

• from savers to borrowers.

• from stocks to bonds.

Which of the following is a reason for diversification?

• to get the highest possible return

• to get the most dividends

• to eliminate risk

• to reduce risk

Bonds are

• loans.

• dividends.

• stocks.

• certificates of deposit.

A bond’s par value is generally repaid

• after 30 years.

• when the lender demands it.

• at maturity.

• when interest rates change.

Which of these bonds are issued by the United States government?

• corporate bonds

• savings bonds

• junk bonds

• municipal bonds

Investors who sell stocks for less than they paid for them experience a

• capital gain.

• capital loss.

• return on investment.

• negative dividend.

When the stock market falls over a period of time, it is known as a

• bear market.

• bull market.

• crash.

• depression.

Speculation is

• low-risk investment with borrowed money in hope of small returns.

• high-risk investment with borrowed money in hope of big returns.

• investment of large amounts of money in mutual funds.

• diversifying purchases of stock into many different kinds of companies.