Chapter 1 Reading Notes

Question 1

is the current commitment of money or other resources

in the expectation of reaping future benefi ts.

Answer 1

investment

Question 2

Examples of money market securities

are

Answer 2

U.S. Treasury bills or bank certificates of deposit (CDs

Question 3

A major part of the total

compensation of top executives is typically in the form of stock options, which means

Answer 3

the managers will not do well unless the stock price increases, benefiting shareholders

Question 4

Is cash a financial or real asset

Answer 4

financial

Question 5

A bank loan is what type of asset

Answer 5

financial

Question 6

Software is a _____ asset

Answer 6

real

Question 7

shares of stock are what type of asset

Answer 7

financial

Question 8

real assets

Answer 8

productive parts of the economy. They actually earn income

Question 9

financial asset

Answer 9

allows us to separate them

Question 10

real vs financial

Answer 10

financial assets cancel out if you put the whole economy together. Real assets produce income