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Chapter 11 Financial Markets Review

Total questions: 20

Worksheet time: 16mins

Name
Class
Date
1.

_______ is an agreement to buy or sell at a specific date in the future at a predetermined price

a)

equities

b)

futures contract

c)

bond

d)

savings

2.

_______ stocks that represent ownership shares in corporations

a)

equities

b)

capital market

c)

secondary market

d)

futures contract

3.

_______ the dollars that become available for investors to use when others refrain from consuming

a)

risk

b)

equities

c)

bond

d)

savings

4.

_______ formal contract to repay borrowed money and interest on the borrowed money at regular future intervals

a)

equities

b)

savings

c)

bond

d)

futures contract

5.

_______ a market in which all financial assets can be sold to someone other than the original issuer

a)

primary market

b)

secondary market

c)

financial system

d)

capital market

6.

_______ a market in which financial capital is loaned and/or borrowed for at least one year

a)

primary market

b)

secondary market

c)

financial system

d)

capital market

7.

_______ a situation in which the outcome is not certain, but the probabilities can be estimated

a)

equities

b)

portfolio diversification

c)

risk

d)

bond

8.

_______ a strategy of holding different kinds of investments to minimize risk

a)

portfolio diversification

b)

bond

c)

futures contract

d)

risk

9.

_______ a market in which only the original issuer can sell or repurchase a financial asset

a)

financial system

b)

primary market

c)

capital market

d)

secondary market

10.

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

a)

secondary market

b)

primary market

c)

financial system

d)

capital market

11.

What kind of fund collects and invests income for later payments to eligible recipients?

a)

pension fund

b)

credit union fund

c)

insurance fund

d)

mutual fund

12.

Which type of financial organization is a nonprofit service cooperative

a)

commercial bank

b)

mutual fund

c)

insurance company

d)

credit union

13.

What is the name of the fee paid for an insurance policy?

a)

interest

b)

pension

c)

contribution

d)

premium

14.

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

a)

a bank

b)

a credit union

c)

a finance company

d)

an insurance company

15.

The rate of return on a corporate, municipal, or government bond is its _______ .

a)

par value

b)

compensation rate

c)

interest rate

d)

coupon rate

16.

Junk bonds usually have low ratings because _______ .

a)

they have a low rate of return

b)

they have a low risk of default

c)

they are not risky investments

d)

they are a high-risk investment

17.

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

a)

the amount of time for maturity

b)

the interest rate

c)

the minimum purchase requirement

d)

the method of sale

18.

Which two investments are at opposite ends of the risk spectrum?

a)

Treasury notes and futures

b)

Savings bonds and Treasury notes

c)

Equities and futures

d)

Equities and futures

19.

What is the main advantage of a mutual fund for an investor?

a)

Its price doesn't change much.

b)

It offers diversity in investment.

c)

It has a set maturity date.

d)

It can be sold at a profit.

20.

Which of the following is an advantage of a 401(k) plan?

a)

Most employers match a portion of your contributions.

b)

You may withdraw funds at any time without penalty.

c)

You never pay taxes on your contributions.

d)

Your contributions are invested in high-return, high-risk fund