- Money invested in a bank current account is an example of investment.
False. Because it does not provide any type of added income, nor does its value increase.
- Customer goodwill is real asset.
True. Customer goodwill enables individuals or firms to produce goods and services that yield profits or income.
- Lease obligations are financial asset.
True. A lease obligation are simply claims to pay or receive income and does not produce wealth. Therefore it is financial asset.
- Stock investment is a gambling.
False. Stock investment is sacrifice of current savings for future rupees in the expectation of positive rate of return. On the other hand, gambling is for entertainment rather than investment purpose.
- Patents are financial assets.
False. Patents enables individuals or firms to produce goods and services that yield profits or income i.e. patents can be used to generate income.
- A college education is real assets.
True. College education enables individuals to increase their knowledge and knowledge can be used to produce goods and services that yield profits or income.
- Insurance company is a financial intermediary.
True. Insurance Company is a financial intermediary that collects the funds by selling insurance policies and then collected funds is channelizing to various sectors. for example, in real estate market, stock market and bond market.
- Term to maturity of the investment is directly varies with risk.
True. Maturity period of the investment is directly vary with risk, higher the maturity period, higher the risk and vice versa.
- The appropriate and correct investment process would be: (a) set investment policy, (b) construct portfolio analysis, (c) perform the security analysis, (d) revise the portfolio, and (e) evaluate the portfolio performance.
False. The appropriate investment process would be (1) set investment policy, (2) perform the security analysis, (3) construct the portfolio analysis, (4) revise the portfolio, and (5) evaluate the portfolio performance.
- Investors always seek to minimize their risk of investing.
True. Mostly investors are risk averse investors (i.e. wants to minimize risk for given level of return), therefore, investors always wants to minimize risk. But if there is increase in risk, then they demands higher return too.
- Security analysts are typically employed only at brokerage houses.
False. Security analyst is that person who analyzes the security by using fundamental and technical analysis. Security analysts employed by institutional investors like mutual funds, insurance company, pension funds, and banks. Other institutions like brokerage house, private equity funds may also use the security analyst.
- Real assets are more liquid than financial assets.
False. Financial assets are more liquid than real assets because financial assets can be buy or sell easily from the stock exchange at given market price. But in case of real assets, market is less liquid.
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