FIN 501 TEST BANK CH (1,2,3) 2026 SPRING TEST QUESTIONS WITH ACCURATE
SOLUTIONS
Stocks are a(n) ________ investment representing ________ of a business.
A) direct; ownership
B) direct; debt
C) indirect; ownership
D) indirect; debt
A
An exchange traded fund that invests in the stocks of large corporations is an example of
A) direct investment.
B) indirect investment.
C) derivative investment.
D) tangible investment.
B
Which of the following has declined in recent years?
A) direct ownership of stock by individual investors
B) the percentage of foreign stocks held in typical portfolios
C) institutional ownership of common stocks
D) the timeliness of information available to investors
A
,Debt represents funds loaned in exchange for
A) dividend income and the repayment of the loan principal.
B) dividend income and an ownership interest in the firm.
C) interest income and a partial ownership interest in the firm.
D) interest income and the repayment of the loan principal.
D
The government is generally
A) not involved in the financial markets.
B) the owner of the financial market.
C) a supplier of funds to the financial market.
D) a demander of funds in the financial market.
D
On a net basis, funds in the financial markets are generally supplied by
A) individuals.
B) both individuals and business firms.
C) business firms.
D) the government.
A
,A forum in which suppliers and demanders of funds make financial transactions is called a
financial
A) institution.
B) bank.
C) instrument.
D) market.
D
Which of the following are true concerning institutional investors?
I. Institutional investors are professionals who manage money for other people.
II. Banks, insurance companies and mutual funds are all institutional investors.
III. Institutional investors are individuals who invest indirectly through financial institutions.
IV. Institutional investors invest large sums of money.
I, II, and IV only
Which of the following is NOT traded in the securities markets?
A) stocks
B) bonds
C) derivatives
D) real estate
D
Which of the following is an example of a tangible asset?
, A) bonds
B) mutual funds
C) real estate
D) stocks
C
IPO activity tends to peak when stock prices
A) have fallen sharply.
B) have risen sharply.
C) are volatile and unstable.
D) Stock prices have relatively little influence on IPO activity.
B
The document that describes the issuer of a security's management and financial position
is known as a
A) balance sheet.
B) 10-K report.
C) prospectus.
D) red herring.
C
Companies offering their stock to the public for the first time usually seek the assistance of
A) investment bankers.
B) the Securities and Exchange Commission.
SOLUTIONS
Stocks are a(n) ________ investment representing ________ of a business.
A) direct; ownership
B) direct; debt
C) indirect; ownership
D) indirect; debt
A
An exchange traded fund that invests in the stocks of large corporations is an example of
A) direct investment.
B) indirect investment.
C) derivative investment.
D) tangible investment.
B
Which of the following has declined in recent years?
A) direct ownership of stock by individual investors
B) the percentage of foreign stocks held in typical portfolios
C) institutional ownership of common stocks
D) the timeliness of information available to investors
A
,Debt represents funds loaned in exchange for
A) dividend income and the repayment of the loan principal.
B) dividend income and an ownership interest in the firm.
C) interest income and a partial ownership interest in the firm.
D) interest income and the repayment of the loan principal.
D
The government is generally
A) not involved in the financial markets.
B) the owner of the financial market.
C) a supplier of funds to the financial market.
D) a demander of funds in the financial market.
D
On a net basis, funds in the financial markets are generally supplied by
A) individuals.
B) both individuals and business firms.
C) business firms.
D) the government.
A
,A forum in which suppliers and demanders of funds make financial transactions is called a
financial
A) institution.
B) bank.
C) instrument.
D) market.
D
Which of the following are true concerning institutional investors?
I. Institutional investors are professionals who manage money for other people.
II. Banks, insurance companies and mutual funds are all institutional investors.
III. Institutional investors are individuals who invest indirectly through financial institutions.
IV. Institutional investors invest large sums of money.
I, II, and IV only
Which of the following is NOT traded in the securities markets?
A) stocks
B) bonds
C) derivatives
D) real estate
D
Which of the following is an example of a tangible asset?
, A) bonds
B) mutual funds
C) real estate
D) stocks
C
IPO activity tends to peak when stock prices
A) have fallen sharply.
B) have risen sharply.
C) are volatile and unstable.
D) Stock prices have relatively little influence on IPO activity.
B
The document that describes the issuer of a security's management and financial position
is known as a
A) balance sheet.
B) 10-K report.
C) prospectus.
D) red herring.
C
Companies offering their stock to the public for the first time usually seek the assistance of
A) investment bankers.
B) the Securities and Exchange Commission.
