AnswersPersonal Finance - EL3403Investing and Financial Markets

Investing and Financial Markets Answers

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1
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What can be traded in a commodities market?

A
stock
B
bonds
C
oil
D
debt
2
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Which types of investments are securities?

A
both debt and equity
B
debt only
C
equity only
D
neither debt nor equity
3

Capital appreciation refers to

A
the increased value of an asset.
B
the ability to make a profit from owning stock.
C
the distribution of earnings to shareholders.
D
the profitable sale of shares.
4

Which describes an investor’s primary goal of buying a loan?

A
to grow a business
B
to earn a profit off the interest
C
to bolster the economy
D
to provide capital to a business
5

Which are the most likely uses of capital invested in a business? Check all that apply.

A
paying taxes
B
hiring workers
C
repaying investors
D
producing goods
E
distributing goods
F
buying materials
6

Which best describes what a market index does?

A
An index measures market performance.
B
An index measures economic trends.
C
An index measures growth.
D
An index measures the performance of a single stock.
7

Which best describes how an investor makes money from an equity investment?

A
by earning interest
B
by selling the asset for a profit
C
by raising capital
D
by growing the asset
8

Which statement best describes how an investor makes money off debt?

A
An investor makes money by issuing bonds.
B
An investor makes money by earning interest.
C
An investor makes money by raising capital.
D
An investor makes money by being repaid for the principal.
9

Which best describes the role that government and business play in investments?

A
They both use taxes to support a country’s growth.
B
They both invest money to earn a profit.
C
They both receive capital to use for growth.
D
They both act as angel investors for start-ups.
10

Once stocks are on the market, which best explains how their prices are set?

A
Prices are controlled by the issuing company.
B
Prices are set by the financial market.
C
Prices follow economic trends.
D
Prices fluctuate on the basis of demand.

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