Households Are Increasingly Likely to Both Directly Purchase Securities (Perhaps

question 24

Multiple Choice

Households are increasingly likely to both directly purchase securities (perhaps via a broker) and also place some money with a bank or thrift to meet different needs. Match up the given investor's desire with the appropriate intermediary or direct security.
I. Money likely to be needed within 6 months
II. Money to be set aside for college in 10 years
III. Money to provide supplemental retirement income
IV. Money to be used to provide for children in the event of death
1) Depository institutions
2) Insurer
3) Pension fund
4) Stocks or bonds

• A) 2, 3, 4, 1
• B) 1, 4, 2, 3
• C) 3, 2, 1, 4
• D) 1, 4, 3, 2
• E) 4, 2, 1, 3

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Definitions:

Financing Activities

Transactions related to raising capital and repaying investors, including issuing equity, debt, and paying dividends.

Investing Activities

Financial transactions related to the acquisition or disposal of long-term assets and investments, part of cash flow analysis.

Inventory

Inventory refers to the goods and materials that a business holds for the ultimate goal of resale, production, or utilization.

Wages Payable

Liabilities owed to employees for work performed that have not yet been paid.