Investments 13e By Zvi Bodie, Alex Kane, Alan Marcus (Test Bank All Chapters, 100% Original Verified, A+ Grade) Answers At The End Of Each Chapter Chapter 1:__________ 1) The material wealth of a society is a function of: A) all financial assets. B) all real assets. C) all financial and real assets. D) all physical assets. E) all physical and financial assets.
2) _______ are real assets. A) Land and mortgages B) Machines and bonds C) Stocks and bonds D) Knowledge and stocks E) Land, machines, and knowledge
3) The means by which individuals hold their claims on real assets in a well-developed
economy are: A) investment assets. B) depository assets. C) derivative assets. D) financial assets. E) exchange-driven assets.
4) _______ are financial assets. A) Bonds and land B) Machines and derivatives C) Stocks and intellectual property D) Bonds and stocks E) Bonds, machines, and stocks
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5) _________ financial asset(s). A) Buildings are B) Land is a C) Derivatives and intellectual property are D) U.S. agency bonds and buildings are E) Derivatives and U.S. agency bonds are
6) Financial assets: A) directly contribute to the country's productive capacity. B) indirectly contribute to the country's productive capacity. C) contribute to the country's productive capacity, both directly and indirectly. D) do not contribute to the country's productive capacity, either directly or indirectly. E) are of no value to anyone.
7) In 2021, ____________ was the most significant real asset of U.S. households in terms of
total value. A) consumer durables B) automobiles C) real estate D) mutual fund shares E) bank loans
8) In 2021, _____________was the least significant financial asset of U.S. households in terms
of total value. A) real estate B) mutual fund shares C) debt securities D) life insurance reserves E) pension reserves
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9) In 2021, _____________ was the most significant financial asset of U.S. households in terms
of total value. A) real estate B) mutual fund shares C) debt securities D) life insurance reserves E) pension reserves
10) In 2021, ____________ was the most significant asset of U.S. households in terms of total
value. A) B) C) D) E)
real estate mutual fund shares debt securities life insurance reserves pension reserves
11) In 2021, ____________ were the most significant liability of U.S. households in terms of
total value. A) credit cards B) mortgages C) bank loans D) student loans E) other forms of debt
12) In 2021, which of the following financial assets make up the greatest proportion of the
financial assets held by U.S. households? A) Pension reserves B) Life insurance reserves C) Mutual fund shares D) Debt securities E) Personal trusts
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13) In 2021, _______ of the assets of U.S. households were financial assets. A) 24.4% B) 28.9% C) 58.4% D) 71.1% E) 87.2%
14) The largest component of domestic net worth in 2021 was: A) nonresidential real estate. B) residential real estate. C) inventories. D) consumer durables. E) equipment and software.
15) The smallest component of domestic net worth in 2021 was: A) nonresidential real estate. B) residential real estate. C) inventories. D) consumer durables. E) equipment and software.
16) The domestic net worth of the U.S. in 2021 was: A) $9.350 trillion. B) $20.813 trillion. C) $45.816 trillion. D) $86.282 trillion. E) $80.983 trillion.
17) A fixed-income security pays: A) a fixed level of income for the life of the owner. B) a fixed stream of income or a stream of income that is determined according to a
specified formula for the life of the security. C) a variable level of income for owners on a fixed income. D) a fixed or variable income stream at the option of the owner. E) None of the choices are correct.
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18) A debt security pays: A) a fixed level of income for the life of the owner. B) a variable level of income for owners on a fixed income. C) a fixed or variable income stream at the option of the owner. D) a fixed stream of income or a stream of income that is determined according to a
specified formula for the life of the security.
19) Money market securities: A) are short term. B) are highly marketable. C) are generally very low risk. D) None of the options are correct. E) All of the options are correct.
20) An example of a derivative security is: A) a common share of Microsoft but not a commodity futures contract. B) a call option on Intel stock but not a commodity futures contract. C) a commodity futures contract or a common share of Microsoft. D) a call option on Intel stock or a commodity futures contract. E) a common share of Microsoft or a call option on Intel stock.
21) The value of a derivative security: A) depends on the value of the related security. B) is unable to be calculated. C) is unrelated to the value of the related security. D) has been enhanced due to the recent misuse and negative publicity regarding these
instruments. E) is worthless today.
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22) Although derivatives can be used as speculative instruments, businesses most often use them
to: A) B) C) D) E)
attract customers. appease stockholders. offset debt. hedge risks. enhance their balance sheets.
23) Financial assets permit all of the following except: A) consumption timing. B) allocation of risk. C) separation of ownership and control. D) elimination of risk. E) All of the choices are correct.
24) The ____________ refers to the potential conflict between management and shareholders. A) agency problem B) diversification problem C) liquidity problem D) solvency problem E) regulatory problem
25) A disadvantage of using stock options to compensate managers is that: A) it encourages managers to undertake projects that will increase stock price. B) it encourages managers to engage in empire building. C) it can create an incentive for managers to manipulate information to prop up a stock
price temporarily, giving them a chance to cash out before the price returns to a level reflective of the firm's true prospects. D) All of the choices are correct. E) None of the choices are correct.
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