Which of the following is true of financial assets?
A)Companies issue financial assets to earn revenue.
B)Investors purchase financial assets to earn a return.
C)The ownership of financial assets cannot be transferred.
D)Investors purchase financial assets because they are virtually risk free.

Question

Quizplus · Accepted Answer

Financial assets are instruments that represent a claim to future cash flows or a share in a company's ownership. Companies issue financial assets such as stocks and bonds to raise capital while investors purchase these assets in hopes of earning a return on their investment. Therefore, option B is the correct choice. Option A is incorrect because companies issue financial assets to raise capital, not to earn revenue. Option C is incorrect because financial assets are transferable. Option D is incorrect because financial assets carry varying degrees of risk, with some being virtually risk-free while others carry significant risk.

Which of the Following Is True of Financial Assets