1) The value of a financial asset is:

A. the sum of all future cash flows it will generate

B. the present value of all future cash flows

C. the future value of all cash flows

D. none of the above

2) A decision to invest 20% of savings in corporate bonds is:

A. security selection

B. leveraged investing

C. asset allocation

D. market neutral investing

3) Asset allocation:

A. involves the broad choice of asset classes for investing

B. involves the specific choice of individual stocks and bonds for a portfolio

C. involves the use of charts for analysis

D. none of the above

4) In a primary market:

A. investors trade with other investors

B. companies issue IPOs or SEOs

C. both A and B

D. none of the above

5) An advantage of buying a companys stock instead of its bonds is:

A. stock has higher priority with regards to cash flows

B. the cash flows from stocks are more predictable and reliable than those from bonds.

C. the potential for gain is greater with stocks than bonds.

D. none of the above