Financial Assets

What are the three functions of money?

• Medium of exchange, unit of account, and store of value

• Payment method, investment, and savings

• Currency, stocks, and bonds

• Digital, physical, and exchange

What is commodity money?

• Money with no intrinsic value

• Government-issued currency

• Money that has intrinsic value

• Digital currency

What is fiat money?

• Currency backed by gold

• Money with intrinsic value

• Money whose value is based on government decree

• Digital currency only

What is a characteristic of commodity money?

• It has no intrinsic value

• It can be used for other purposes beyond being a medium of exchange

• It is only digital

• It is always issued by the government

What does M1 money supply include?

• Currency in circulation and checkable deposits

• Money market funds

• Savings accounts and CDs

• Stocks and bonds

What does M2 money supply include?

• Cryptocurrencies

• Stocks and real estate

• M1 plus savings accounts, CDs, and money market funds

• Only physical currency

What is the relationship between interest rates and bond prices?

• Directly proportional

• Inversely proportional

• No relationship

• Only affects stocks

What is not considered money?

• Traveler's checks

• Real estate

• Funds in your checking account

• Cash in your wallet

What represents ownership in a company?

• Savings accounts

• Stocks or equities

• Bonds

• Fiat money

Why might someone prefer to own stocks over keeping all their money in a checking account?

• Stocks have lower risk

• Stocks can potentially earn more in the future

• Stocks are considered money

• Stocks have a fixed interest rate