INVESTMENTS CH. 1-3, 28 (BODIE, KANE, MARCUS) QUESTIONS WITH CORRECT ANSWERS

INVESTMENTS CH. 1-3, 28 (BODIE,
KANE, MARCUS) QUESTIONS WITH
CORRECT ANSWERS
InvestmentsH-HcorrectHanswer--
HCommitmentHofHcurrentHresourcesHinHtheHexpectationHofHderivingHgreaterHresourcesHinHtheHfuture.




RealHassetsH-HcorrectHanswer--HAssetsHusedHtoHproduceHgoodsHandHservices



FinancialHassetsH-HcorrectHanswer--HClaimsHonHrealHassetsHofHtheHincomeHgeneratedHbyHthem



EquityH-HcorrectHanswer--HAnHownershipHshareHinHaHcorporation



DerivativeHsecuritiesH-HcorrectHanswer--
HSecuritiesHprovidingHpayoffsHthatHdependHonHtheHvaluesHofHotherHassets




FixedHincomeH(debt)HsecuritiesH-HcorrectHanswer--HPayHaHspecifiedHcashHflowHoverHaHspecificHperiod



AgencyHproblemsH-HcorrectHanswer--HConflictsHofHinterestHbetweenHmanagersHandHstockholders



AssetHallocationH-HcorrectHanswer--HAllocationHofHanHinvestmentHportfolioHacrossHbroadHassetHclasses



SecurityHSelectionH-HcorrectHanswer--HChoiceHofHspecificHsecuritiesHwithinHeachHassetHclass



SecurityHanalysisH-HcorrectHanswer--HAnalysisHofHtheHvalueHofHsecurities



RiskHreturnHtradeHoffH-HcorrectHanswer--HAssetsHwithHhigherHexpectedHreturnsHentailsHgreaterHrisk



PassiveHmanagementH-HcorrectHanswer--
HbuyingHandHholdingHaHdiversifiedHportfolioHwithoutHattemptingHtoHidentifyHmispricedHsecurities

, ActiveHmanagementH-HcorrectHanswer--
HattemptingHtoHidentifyHmispricedHsecuritiesHorHtoHforecastHbroadHmarketHtrends




FinancialHintermediariesH-HcorrectHanswer--
HInstitutionsHthatH"connect"HborrowersHandHlendersHbyHacceptingHfundsHfromHlendersHandHloaningHfundsHt

oHborrowers



InvestmentHcompaniesH-HcorrectHanswer--
HFirmsHmanagingHfundsHforHinvestors.HAnHinvestmentHcompanyHmayHmanageseveralHmutualHfunds.




InvestmentHBankersH-HcorrectHanswer--
HFirmsHspecializingHinHtheHsaleHofHnewHsecuritiesHtoHtheHpublic,HtypicallyHbyHunderwritingHtheHissues




PrimaryHMarketH-HcorrectHanswer--HaHmarketHinHwhichHnewHissuesHofHsecuritiesHareHofferedHtoHtheHpublic



SecondaryHmarketH-HcorrectHanswer--HPreviouslyHissuedHsecuritiesHareHtradedHamongHinvestors



VentureHcapitalH-HcorrectHanswer--HmoneyHinvestedHtoHfinanceHaHnewHfirm



PrivateHequityH-HcorrectHanswer--HInvestmentsHinHcompaniesHthatHareHnotHtradedHonHaHstockHexchange



SecuritizationH-HcorrectHanswer--
HPoolingHloansHintoHstandardizedHsecuritiesHbackedHbyHthoseHloans,HwhichHcanHthenHbeHtradedHlikeHanyHot

herHsecurity



SystematicHriskH-HcorrectHanswer--
HRiskHofHbreakdownHinHtheHfinancialHsystem,HparticularlyHdueHtoHspilloverHeffectsHfromHoneHmarketHintoHot

hers



MoneyHmarketsH-HcorrectHanswer--HincludeHshort-term,HhighlyHliquid,HandHrelativelyHlow-
riskHdebtHinstruments