FINA 3315 Exam 1 ACTUAL Exam
Questions and CORRECT Answers
investment - CORRECT ANSWER - any asset into which funds can be placed with the
expectation that it will generate positive income and/or increase its value
return - CORRECT ANSWER - the reward for owning an investment
- Income from investment
- Increase in value of investment
Attributes of Investments - CORRECT ANSWER - securities, liquidity, property, debt,
equity, derivative securities
Securities - CORRECT ANSWER - investments issued by firms, governments, or other
organizations that represent a financial claim on the issuer's resources
Liquidity - CORRECT ANSWER - the ability to buy and sell quickly
Property - CORRECT ANSWER - real assets that are typically less liquid than securities
- Real property: land, buildings, and things permanently affixed tothe land
- Tangible personal property: such as gold, artwork, antiques, and collectibles
direct investment - CORRECT ANSWER - investor directly acquires a claim/ownership
indirect investment - CORRECT ANSWER - investor indirectly acquires a
claim/ownership via a professional investment manager
debt - CORRECT ANSWER - investor lends funds in exchange for interest income and
repayment of loan in future (bonds)
, equity - CORRECT ANSWER - ongoing ownership in a business or property (common
stocks)
derivative securities - CORRECT ANSWER - neither debt nor equity; derive value from
an underlying asset (options)
risk - CORRECT ANSWER - uncertainty surrounding the return that a particular
investment will generate
- Low-risk: more predictable, lower average return
- High-risk: less predictable, higher average return
diversification - CORRECT ANSWER - holding different types of assets in an investment
portfolio
Short-term investments - CORRECT ANSWER - maturities of one year or less
long-term investments - CORRECT ANSWER - maturities of longer than one year
domestic investment - CORRECT ANSWER - securities issued by domestic companies
Foreign - CORRECT ANSWER - securities issued by foreign companies
households - CORRECT ANSWER - - some need for loans (house, auto)
- Typically net suppliers of funds
Government - CORRECT ANSWER - federal, state, and local projects and operations
- typically, net demanders of funds
Questions and CORRECT Answers
investment - CORRECT ANSWER - any asset into which funds can be placed with the
expectation that it will generate positive income and/or increase its value
return - CORRECT ANSWER - the reward for owning an investment
- Income from investment
- Increase in value of investment
Attributes of Investments - CORRECT ANSWER - securities, liquidity, property, debt,
equity, derivative securities
Securities - CORRECT ANSWER - investments issued by firms, governments, or other
organizations that represent a financial claim on the issuer's resources
Liquidity - CORRECT ANSWER - the ability to buy and sell quickly
Property - CORRECT ANSWER - real assets that are typically less liquid than securities
- Real property: land, buildings, and things permanently affixed tothe land
- Tangible personal property: such as gold, artwork, antiques, and collectibles
direct investment - CORRECT ANSWER - investor directly acquires a claim/ownership
indirect investment - CORRECT ANSWER - investor indirectly acquires a
claim/ownership via a professional investment manager
debt - CORRECT ANSWER - investor lends funds in exchange for interest income and
repayment of loan in future (bonds)
, equity - CORRECT ANSWER - ongoing ownership in a business or property (common
stocks)
derivative securities - CORRECT ANSWER - neither debt nor equity; derive value from
an underlying asset (options)
risk - CORRECT ANSWER - uncertainty surrounding the return that a particular
investment will generate
- Low-risk: more predictable, lower average return
- High-risk: less predictable, higher average return
diversification - CORRECT ANSWER - holding different types of assets in an investment
portfolio
Short-term investments - CORRECT ANSWER - maturities of one year or less
long-term investments - CORRECT ANSWER - maturities of longer than one year
domestic investment - CORRECT ANSWER - securities issued by domestic companies
Foreign - CORRECT ANSWER - securities issued by foreign companies
households - CORRECT ANSWER - - some need for loans (house, auto)
- Typically net suppliers of funds
Government - CORRECT ANSWER - federal, state, and local projects and operations
- typically, net demanders of funds
