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This quiz consists of 5 multiple choice and 5 short answer questions through Chapters 4-7.

Multiple Choice Questions

1. What is a contract between two parties that specifies conditions under which payments, or payoffs, are to be made between the parties?
(a) Futures contract.
(b) Legislation.
(c) Exchange rate.
(d) Derivative.

2. What is an investment position intended to offset potential losses that may be incurred by a companion investment?
(a) Hedge.
(b) Futures contract.
(c) Deductible.
(d) Bond.

3. What is a collective investment scheme that aims to replicate the movements of an index of a specific financial market regardless of market conditions?
(a) Money market.
(b) Futures contract.
(c) Index fund.
(d) Public policy.

4. In Chapter 2, the author discusses how the black rhinoceros is nearly extinct and that the horns are considered what?
(a) An aphrodesiac.
(b) A poison.
(c) An evil potion.
(d) An alkaloid.

5. What does the author refer to as a situation where individuals work in their own best interest, leading to an improved standard of living for society in general?
(a) Capitalism.
(b) Asset allocation.
(c) Money market.
(d) Communism.

Short Answer Questions

1. Economists ignored signs of problems in what year because they didn't want to face what might happen in the future, according to the author in the Introduction?

2. OPEC has maintained its headquarters where since 1965?

3. According to the author, insurance companies want to save money while doctors want to help patients and avoid what?

4. Gary Becker figured that the stock of skills, education, training and an individual's health constitutes about what percent of a modern economy's wealth?

5. What is a financial term denoting a collection of investments held by an investment company, hedge fund, financial institution or individual?

(see the answer key)

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