©SOPHIABENNET@2024/2025 Tuesday, August 20, 2024 10:21 AM
Investments Ch. 1-3, 28 (Bodie, Kane,
Marcus) Practice Questions and
Answers (100% Pass)
Real assets - Answer✔️✔️-- Assets used to produce goods and services
Financial assets - Answer✔️✔️-- Claims on real assets of the income
generated by them
Derivative securities - Answer✔️✔️-- Securities providing payoffs that
depend on the values of other assets
Fixed income(debt) securities - Answer✔️✔️-- Pay a specified cash flow over
a specific period
Agency problems - Answer✔️✔️-- Conflicts of interest between managers
and stockholders
Security analysis - Answer✔️✔️-- Analysis of the value of securities
Risk return trade off - Answer✔️✔️-- Assets with higher expected returns
entails greater risk
Passive management - Answer✔️✔️-- buying and holding a diversified
portfolio without attempting to identify mispriced securities
Active management - Answer✔️✔️-- attempting to identify mispriced
securities or to forecast broad market trends
1
, ©SOPHIABENNET@2024/2025 Tuesday, August 20, 2024 10:21 AM
Financial intermediaries - Answer✔️✔️-- Institutions that "connect"
borrowers and lenders by accepting funds from lenders and loaning funds
to borrowers
Investment companies - Answer✔️✔️-- Firms managing funds for investors.
An investment company may manageseveral mutual funds.
Investment Bankers - Answer✔️✔️-- Firms specializing in the sale of new
securities to the public, typically by underwriting the issues
Primary Market - Answer✔️✔️-- a market in which new issues of securities
are offered to the public
Secondary market - Answer✔️✔️-- Previously issued securities are traded
among investors
Venture capital - Answer✔️✔️-- money invested to finance a new firm
Private equity - Answer✔️✔️-- Investments in companies that are not traded
on a stock exchange
Securitization - Answer✔️✔️-- Pooling loans into standardized securities
backed by those loans, which can then be traded like any other security
Systematic risk - Answer✔️✔️-- Risk of breakdown in the financial system,
particularly due to spillover effects from one market into others
Money markets - Answer✔️✔️-- include short-term, highly liquid, and
relatively low-risk debt instruments
2
Investments Ch. 1-3, 28 (Bodie, Kane,
Marcus) Practice Questions and
Answers (100% Pass)
Real assets - Answer✔️✔️-- Assets used to produce goods and services
Financial assets - Answer✔️✔️-- Claims on real assets of the income
generated by them
Derivative securities - Answer✔️✔️-- Securities providing payoffs that
depend on the values of other assets
Fixed income(debt) securities - Answer✔️✔️-- Pay a specified cash flow over
a specific period
Agency problems - Answer✔️✔️-- Conflicts of interest between managers
and stockholders
Security analysis - Answer✔️✔️-- Analysis of the value of securities
Risk return trade off - Answer✔️✔️-- Assets with higher expected returns
entails greater risk
Passive management - Answer✔️✔️-- buying and holding a diversified
portfolio without attempting to identify mispriced securities
Active management - Answer✔️✔️-- attempting to identify mispriced
securities or to forecast broad market trends
1
, ©SOPHIABENNET@2024/2025 Tuesday, August 20, 2024 10:21 AM
Financial intermediaries - Answer✔️✔️-- Institutions that "connect"
borrowers and lenders by accepting funds from lenders and loaning funds
to borrowers
Investment companies - Answer✔️✔️-- Firms managing funds for investors.
An investment company may manageseveral mutual funds.
Investment Bankers - Answer✔️✔️-- Firms specializing in the sale of new
securities to the public, typically by underwriting the issues
Primary Market - Answer✔️✔️-- a market in which new issues of securities
are offered to the public
Secondary market - Answer✔️✔️-- Previously issued securities are traded
among investors
Venture capital - Answer✔️✔️-- money invested to finance a new firm
Private equity - Answer✔️✔️-- Investments in companies that are not traded
on a stock exchange
Securitization - Answer✔️✔️-- Pooling loans into standardized securities
backed by those loans, which can then be traded like any other security
Systematic risk - Answer✔️✔️-- Risk of breakdown in the financial system,
particularly due to spillover effects from one market into others
Money markets - Answer✔️✔️-- include short-term, highly liquid, and
relatively low-risk debt instruments
2
