Question 1

Anvis Asset Management Fund is a mutual fund company that sells securities to investors and uses the money to purchase bonds and corporate stocks. Anvis Asset Management Fund is a(n) _____.

Accepted Answer

Anvis Asset Management Fund is an institutional investor because it pools money from investors to purchase securities like bonds and stocks.

Question 2

Which of the following statements is true of credit unions?

Accepted Answer

Credit unions are member-owned financial cooperatives that are open to individuals who belong to a specific field of membership, such as a particular community, employer, or organization.

Question 3

A sell limit order tells a broker to sell the shares only if the price is at or above a specified value.

Accepted Answer

A sell limit order is an instruction to sell a security only at or above a specified price, ensuring the seller receives at least that price.

Question 4

Kenneth is very particular about his investment decisions and likes to perform an extensive market research before making any major investment. He, however, does not have the time and expertise to conduct market research. To deal with this situation, he should hire a(n) _____.

Accepted Answer

A securities broker can provide Kenneth with the necessary market research and investment advice, as they are professionals who buy and sell securities on behalf of clients and often offer investment guidance.

Question 5

Helmert Federal, a financial institution, acquires its funds primarily from the deposits of its customers, and then uses these funds to make mortgage loans for individuals interested in purchasing real estate properties. Helmert Federal is a(n) _____.

Accepted Answer

Helmert Federal is a savings and loan association, which is a financial institution that primarily acquires funds from customer deposits and uses these funds to provide mortgage loans for real estate purchases.

Question 6

Samuel assists his clients in investing in the stock market. He not only acts as an agent by buying and selling corporate stocks and bonds on behalf of them, but also provides them with services like financial consultation and market research for a fee. In this scenario, Samuel plays the role of a(n) _____.

Accepted Answer

Samuel acts as a securities broker because he buys and sells stocks and bonds on behalf of his clients and provides additional services like financial consultation and market research for a fee.

Question 7

In the context of the various strategies for investing in securities, a buy-and-hold approach works only if a person makes frequent trades.

Accepted Answer

A buy-and-hold strategy involves purchasing securities and holding them for a long period, minimizing frequent trading and relying on long-term market growth.

Question 8

The FTSE 100 is an index of the stock prices of the largest traded companies listed on the London Stock Exchange.

Accepted Answer

The FTSE 100 Index comprises the 100 largest companies by market capitalization listed on the London Stock Exchange.

Question 9

Investors who employ a buy-and-hold investment approach invest in index mutual funds and exchange-traded funds.

Accepted Answer

The buy-and-hold investment strategy involves purchasing securities and holding them for a long period, and index mutual funds and ETFs are popular choices for this strategy due to their diversification and low costs.

Question 10

Tony is facing a financial crisis in his business. Instead of applying for a loan from a commercial bank, he takes a loan from the cooperative that he partly owns with some of his friends. This cooperative acts as a depository institution where all the members deposit their savings on a higher interest rate than that offered by commercial banks. Being a member of this cooperative, he gets the advantage of being charged lower interest rate on his loan. Based on the information given in the scenario, the cooperative owned by Tony and his friends exemplifies a(n) _____.

Accepted Answer

The cooperative described in the scenario functions as a credit union, which is a member-owned financial cooperative that provides savings, credit, and other financial services to its members, often at more favorable rates than commercial banks.

Question 11

A _____ is the most common depository institution.

Accepted Answer

A commercial bank is the most common type of depository institution, offering a wide range of financial services to individuals and businesses.

Question 12

Mr. Troy wants to buy stocks of a local retail company. He needs help with market research and requires some investing advice, as well as someone to do the trading for him. Mr. Troy should contact a(n) _____.

Accepted Answer

A securities broker can provide market research, investing advice, and execute trades on behalf of clients like Mr. Troy.

Question 13

It is fairly easy to acquire loans in Arzenia as the financial intermediaries of the country receive sufficient funds in the form of savings from its people and businesses. This enables them to turn the funds obtained into loans. Based on the information given in the scenario, these financial intermediaries are a form of _____.

Accepted Answer

Depository institutions are financial intermediaries that accept deposits from individuals and businesses and use these funds to provide loans.

Question 14

Mrs. Jamieson, a retiree, likes to invest in preferred stocks and bonds as it involves very little risk. She knows that the value of many of these stocks will not increase drastically, but the small returns help supplement her pension. Mrs. Jamieson's approach is an example of the market timing strategy.

Accepted Answer

Market timing strategy involves making buy or sell decisions of financial assets by attempting to predict future market price movements, whereas Mrs. Jamieson's approach is focused on low-risk, stable income investments rather than timing the market.

Question 15

Markets that transfer funds from savers to borrowers are referred to as _____.

Accepted Answer

Financial markets are platforms where funds are transferred from savers, who have excess funds, to borrowers, who need funds.

Question 16

Which of the following is true of securities brokers?

Accepted Answer

Securities brokers act as intermediaries or agents for investors, facilitating the buying and selling of financial securities on behalf of their clients.

Question 17

Futures Life Insurance is an insurance company in South Africa. The insurance company uses its large pool of financial capital, which it accumulates by collecting premiums from its policyholders, to purchase corporate stocks of different multinational companies. In this scenario, Futures Life Insurance is a(n) _____.

Accepted Answer

Futures Life Insurance is an institutional investor because it uses the premiums collected from policyholders to invest in corporate stocks, which is a typical activity of institutional investors.

Question 18

Lina, along with ten of her colleagues, starts a financial cooperative to financially assist each other. The members pool their savings in the cooperative, and they can also take loans from it on a low interest rate. Members of the cooperative benefit from higher returns on savings and lower rates on loans. In this scenario, the cooperative started by Lina and her colleagues exemplifies a(n) _____.

Accepted Answer

The cooperative started by Lina and her colleagues is a credit union, which is a member-owned financial cooperative that provides savings, credit, and other financial services to its members.

Question 19

Institutional investors:

Accepted Answer

Institutional investors gather large amounts of capital from various sources to invest in securities, including corporate stocks.

Question 20

Which of the following is a difference between credit unions and commercial banks?

Accepted Answer

Credit unions are not-for-profit organizations owned by their members, whereas commercial banks are for-profit institutions owned by shareholders.

Quiz 10: Securities Markets: Trading Financial Resources