BODIE - CHAPTER 1: THE INVESTMENT
ENVIRONMENT QUESTIONS WITH
CORRECT ANSWERS 2025
FinancialTAssetsT-TcorrectTanswer-claimsTonTrealTassetsTorTtheTincomeTgeneratedTbyTthem
ThereTareTthreeTbroadTtypesTofT______________________:TFixedTIncome,TEquity,TandTDerivatives
FixedTIncomeTsecuritiesT-TcorrectTanswer-(OneTofTthreeTmajorTtypesTofTfinancialTassets)
ATsecurityTsuchTasTaTbondTthatTpaysTaTspecifiedTcashTflowToverTaTspecificTperiod
EquityTsecuritiesT-TcorrectTanswer-(OneTofTthreeTmajorTtypesTofTfinancialTassets)
claimsTofTownershipTinTaTcorporation
DerivativeTsecuritiesT-TcorrectTanswer-(OneTofTthreeTmajorTtypesTofTfinancialTassets)
ATsecurityTwhoseTpayoffTdependsTonTtheTvalueTofTotherTfinancialTvariablesTsuchTasTstockTprices,TinterestTra
tes,TorTexchangeTrates.
ActivistTInvestorsT-TcorrectTanswer-(SeparationTofTOwnershipTandTManagement)
TheseTareTlargeTandTdeep-
pocketedTinvestors,ToftenThedgeTfunds,TthatTidentifyTfirmsTtheyTbelieveTtoTbeTmismanagedTinTsomeTrespec
t.TTheyTbuyTlargeTpositionsTinTsharesTofTthoseTfirmsTandTthenTcampaignTforTslotsTonTtheTboardTofTdirectorsT
and/orTforTspecificTreforms.
Top-downTPortfolioTConstructionT-TcorrectTanswer-(TheTInvestmentTProcess)
WherebyTaTportfolioTofTfinancialTassetsTstartsTwithTassetTallocation,TthenTsecurityTselection.T
i.e,TfirstTtheTproportionTofTportfolioTinTstocks,Tbonds,Tetc,TisTdetermined,TthenTtheTspecificTsecuritiesTwithin
TeachTassetTclassTisTdetermined.
ENVIRONMENT QUESTIONS WITH
CORRECT ANSWERS 2025
FinancialTAssetsT-TcorrectTanswer-claimsTonTrealTassetsTorTtheTincomeTgeneratedTbyTthem
ThereTareTthreeTbroadTtypesTofT______________________:TFixedTIncome,TEquity,TandTDerivatives
FixedTIncomeTsecuritiesT-TcorrectTanswer-(OneTofTthreeTmajorTtypesTofTfinancialTassets)
ATsecurityTsuchTasTaTbondTthatTpaysTaTspecifiedTcashTflowToverTaTspecificTperiod
EquityTsecuritiesT-TcorrectTanswer-(OneTofTthreeTmajorTtypesTofTfinancialTassets)
claimsTofTownershipTinTaTcorporation
DerivativeTsecuritiesT-TcorrectTanswer-(OneTofTthreeTmajorTtypesTofTfinancialTassets)
ATsecurityTwhoseTpayoffTdependsTonTtheTvalueTofTotherTfinancialTvariablesTsuchTasTstockTprices,TinterestTra
tes,TorTexchangeTrates.
ActivistTInvestorsT-TcorrectTanswer-(SeparationTofTOwnershipTandTManagement)
TheseTareTlargeTandTdeep-
pocketedTinvestors,ToftenThedgeTfunds,TthatTidentifyTfirmsTtheyTbelieveTtoTbeTmismanagedTinTsomeTrespec
t.TTheyTbuyTlargeTpositionsTinTsharesTofTthoseTfirmsTandTthenTcampaignTforTslotsTonTtheTboardTofTdirectorsT
and/orTforTspecificTreforms.
Top-downTPortfolioTConstructionT-TcorrectTanswer-(TheTInvestmentTProcess)
WherebyTaTportfolioTofTfinancialTassetsTstartsTwithTassetTallocation,TthenTsecurityTselection.T
i.e,TfirstTtheTproportionTofTportfolioTinTstocks,Tbonds,Tetc,TisTdetermined,TthenTtheTspecificTsecuritiesTwithin
TeachTassetTclassTisTdetermined.