Question

1. Which of the following statements is true?

A. Stocks and bonds are traded in physical asset markets.

B. Spot market transactions take place on a specific date in the future.

C. Certificates of deposit are financial market assets.

D. The NYSE is an example of a private market.

2. Which of the following has the highest historical average return?

A. Large company stocks.

B. Small company stocks.

C, Corporate bonds.

D. Government bonds.

3. Which of the following is a characteristic of an efficient market?

A. Market prices that are about equal to their intrinsic value.

B. Irrational and overconfident behavior.

C. Market prices that trade above their intrinsic value for long periods of time.

D. Market prices that trade below their intrinsic value for long periods of time.

4. Which of the following is true?

A. Markets would be less efficient if people followed the biblical guidance on weights and measures.

B. Biblical guidance in terms of fair pricing is consistent, weights and measures should be fair and people should not adjust boundary stones.

C. Markets would be less efficient if people followed the biblical guidance on weights and measures.

D. The Bible does not give much guidance in terms of honest pricing.

Answer 1

1.

C. Certificates of deposit are financial market assets.

2.

B. Small company stocks, as they are risky forms of investment and provides the highest return.

3.

A. Market prices that are about equal to their intrinsic value. If the market price would be equal to intrinsic value then no arbitrage would have been possible leading to an efficient market.

4.

B. Biblical guidance in terms of fair pricing is consistent, weights and measures should be fair and people should not adjust boundary stones.