CHAP 1

Question 1

Definition of investment ?

Answer 1

Any assets into which funds can be placed with expectation of positive income

Question 2

Definition portfolio :

Answer 2

A collection of different investment

Question 3

Definition of return :

Answer 3

Rewards from investment

Question 4

Definitions of securities :

Answer 4

Financial assets that represent claims on the resources of the issuer

Question 5

Definition of Liquidity :

Answer 5

The ability to buy and sell quickly

Question 6

What is derivative security ?

Answer 6

Neither debt or equity

• Derive value from an underlying assets (option)

Question 7

Definition of diversification :

Answer 7

Holding types of assets in an investment portfolio

Question 8

Meaning of “short term”

Answer 8

Maturities of one year or less

Question 9

Meaning of “long term “

Answer 9

Maturities longer than one Year

Question 10

Are household net suppliers or net demander of funds?

Answer 10

Net supplier off funds

Question 11

Is government net suppliers or net demander of funds?

Answer 11

Net demander of funds

Question 12

Are businesses net suppliers or net demander of funds?

Answer 12

Net demanders of funds

Question 13

Definition of Mutual Funds

Answer 13

• Actively or passively managed portfolio of securities created by pooling the funds of many investor
• Allow investors to construct diversified portfolios without investing a lot of money
• Money market mutual funds (or money funds) invest solely in short-term investment

Question 14

What is ETF ?

Answer 14

Exchange traded funds :

Like mutual funds but they share trade on EXCHANGES

So investor can buy and sell at any time

Question 15

What are options ?

Answer 15

Securities that give the investor an opportunity to sell or buy another security at specific price over given period of time

Question 16

What are futures ?

Answer 16

They are legally binding obligations stipulating that the seller of the contract will make