Chapter 9

1) Risk is the likelihood of an occurrence of a wanted event.

True / False

2) The pursuit of a future return by delaying consumption and taking an anticipated, desired level of risk is called investing.

True / False

3) The decrease in asset value over a certain period is called appreciation.

True / False

4) Tax shelter is a reduction, usually mortgage interest and tax depreciation for RE investment, in taxable investment income.

True / False

5) Leverage is teh use of borrowed funds by the investor with the anticipation of decreasing investment returns.

True / False

6) Which of the following is not a risk?

a) Management

b) Inflation

c) Financial

d) None of the above.

7) Diversification is

a) Investing in a variety of assets to spread risk.

b) Investing in one stock to maximize risk.

c) Investing in one stock to minimize risk.

d) Investing in a variety of assets to maximize return.

8) An oligopoly market has following characteristic.

a) Many suppliers with full control over the market.

b) A few suppliers that have some control over the market.

c) One supplier with no control over the market.

d) None of the above.

Answers:

False, True, False, True, False, d), a), b)