1. Shares of stock represent:
shares of ownership in the issuing company.
a tax liability for the issuing company.
a tax deduction for the investor.
a debt of the issuing company to the investors who purchase the stock.
2. Which is NOT a financial intermediary?
pension funds
mutual funds
life insurance companies
credit card companies
3. A common strategy to reduce the potential of a large financial loss is to:
buy and sell assets through a mutual fund, since mutual funds cannot lose money.
diversify financial assets so that their risks of failure are unrelated.
buy financial assets from developing countries, because the rates of return are very high and safe and their national currencies are much more stable than the U.S. dollar.
buy real instead of financial assets.
4. Four types of financial intermediaries are:
mutual funds, pension funds, government, and the central bank.
mutual funds, pension funds, life insurance companies, and banks.
banks, stock markets, pension funds, and the central bank.
the central bank, government, the stock market, and the Dow Jones Industrial Average.