Which of the following are financial assets?
1. Debt securities
2. Equity securities
3. Derivative securities
1 only
1 and 2 only
2 and 3 only
1, 2, and 3
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 01-02 Distinguish
between real assets and financial assets.
13.
Award: 10.00 points
14.
Award: 10.00 points
_______ are examples of financial intermediaries.
Commercial banks
Insurance companies
Investment companies
All of the choices are correct.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 01-05 Identify
different types of financial markets and
the major participants in each of those
markets.
Asset allocation refers to _______.
the allocation of the investment portfolio across broad asset classes
the analysis of the value of securities
the choice of specific assets within each asset class
None of the choices are correct.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 01-04 Describe the
major steps in the construction of an
investment portfolio.
15.
Award: 10.00 points
16.
Award: 10.00 points
Which one of the following best describes the purpose of derivatives markets?
Transferring risk from one party to another.
Investing for a short time period to earn a small rate of return.
Investing for retirement
Earning interest income
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 01-03 Explain the
economic functions of financial markets
and how various securities are related to
the governance of the corporation.
Security selection refers to the _______.
allocation of the investment portfolio across broad asset classes
analysis of the broad asset classes
choice of specific securities within each asset class
top-down method of investing
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 01-04 Describe the
major steps in the construction of an
investment portfolio.
17.
Award: 10.00 points
18.
Award: 10.00 points
Which of the following is an example of an agency problem?
Managers engage in empire building.
Managers protect their jobs by avoiding risky projects.
Managers overconsume luxuries such as corporate jets.
All of the options are examples of agency problems.
In each case, the agents (managers) do not act in the best interest of the principals (shareholders).
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 01-03 Explain the
economic functions of financial markets
and how various securities are related to
the governance of the corporation.
_______ is (are) a mechanism for mitigating potential agency problems.
Tying income of managers to success of the firm
Directors defending top management
Antitakeover strategies
All of the choices are correct.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 01-03 Explain the
economic functions of financial markets
and how various securities are related to
the governance of the corporation.
19.
Award: 10.00 points
20.
Award: 10.00 points
_______ is (are) real assets.
Bonds
Production equipment
Stocks
Life insurance
Real assets, such as production equipment, have intrinsic productive capacity.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 01-02 Distinguish
between real assets and financial assets.
_______ portfolio construction starts with selecting attractively priced securities.
Bottom-up
Top-down
Upside-down
Side-to-side
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 01-04 Describe the
major steps in the construction of an
investment portfolio.
21.
Award: 10.00 points
22.
Award: 10.00 points
In a market economy, capital resources are primarily allocated by _______.
governments
corporation CEOs
financial markets
investment bankers
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 01-03 Explain the
economic functions of financial markets
and how various securities are related to
the governance of the corporation.
_______ represents an ownership share in a corporation.