,Essentials of Investments, 11e (Bodie)
Chapter 1 Investments: Background and Issues
1) Financial assets represent ________ of total assets of U.S. households.
A) under 70%
B) over 90%
C) under 10%
D) about 30%
Answer: A
Difficulty: 1 Easy
Topic: Real Assets versus Financial Assets
Learning Objective: 01-02 Distinguish between real assets and financial assets.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
2) Real assets in the economy include all but which one of the following?
A) land
B) buildings
C) consumer durables
D) common stock
Answer: D
Difficulty: 1 Easy
Topic: Real Assets versus Financial Assets
Learning Objective: 01-02 Distinguish between real assets and financial assets.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
3) Net worth represents ________ of the liabilities and net worth of commercial banks.
A) about 51%
B) about 91%
C) about 11%
D) about 31%
Answer: C
Difficulty: 2 Medium
Topic: Financial Intermediaries
Learning Objective: 01-02 Distinguish between real assets and financial assets.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
,4) According to the Flow of Funds Accounts of the United States, the largest single asset of U.S.
households is ________.
A) mutual fund shares
B) real estate
C) pension reserves
D) corporate equity
Answer: B
Difficulty: 2 Medium
Topic: Real Assets versus Financial Assets
Learning Objective: 01-02 Distinguish between real assets and financial assets.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
5) According to the Flow of Funds Accounts of the United States, the largest liability of U.S.
households is ________.
A) mortgages
B) consumer credit
C) bank loans
D) gambling debts
Answer: A
Difficulty: 2 Medium
Topic: Real Assets versus Financial Assets
Learning Objective: 01-02 Distinguish between real assets and financial assets.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
6) ________ is not a derivative security.
A) A share of common stock
B) A call option
C) A futures contract
D) None of the options (All of the answers are derivative securities.)
Answer: A
Difficulty: 1 Easy
Topic: Financial Assets
Learning Objective: 01-02 Distinguish between real assets and financial assets.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
, 7) According to the Flow of Funds Accounts of the United States, the largest financial asset of
U.S. households is ________.
A) mutual fund shares
B) corporate equity
C) pension reserves
D) deposits
Answer: C
Difficulty: 2 Medium
Topic: Real Assets versus Financial Assets
Learning Objective: 01-02 Distinguish between real assets and financial assets.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
8) Active trading in markets and competition among securities analysts helps ensure that:
I. Security prices approach informational efficiency.
II. Riskier securities are priced to offer higher potential returns.
III. Investors are unlikely to be able to consistently find under- or overvalued securities.
A) I only
B) I and II only
C) II and III only
D) I, II, and III
Answer: D
Difficulty: 3 Hard
Topic: Financial Markets and the Economy
Learning Objective: 01-03 Explain the economic functions of financial markets and how various
securities
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
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