Enron
WorldCom
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.
63.
Award: 10.00 points
64.
Award: 10.00 points
Accounting scandals can often be attributed to a concept in the study of finance known as the
_______.
agency problem
risk-return trade-off
allocation of risk
securitization
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.
An intermediary that pools and manages funds for many investors is called _______.
an investment company
an insurance company
an investment banker
a commercial bank
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 01-02 Distinguish
between real assets and financial assets.
65.
Award: 10.00 points
66.
Award: 10.00 points
Financial institutions that specialize in assisting corporations in primary market transactions are
called _______.
mutual funds
investment bankers
pension funds
globalization specialists
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 01-02 Distinguish
between real assets and financial assets.
When a pass-through mortgage security is issued, what does the issuing agency expect to receive?
The amount of the original loan plus a servicing fee.
The principal and interest that are paid by the homeowner.
The principal and interest that are paid by the homeowner, minus a servicing fee.
The interest paid by the homeowner, plus a servicing fee.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 01-06 Explain the
causes and consequences of the financial
crisis of 2008–2009.
67.
Award: 10.00 points
68.
Award: 10.00 points
In 2008 the largest corporate bankruptcy in U.S. history involved the investment banking firm of
_______.
Goldman Sachs
Lehman Brothers
Morgan Stanley
Merrill Lynch
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 01-06 Explain the
causes and consequences of the financial
crisis of 2008–2009.
The inability of shareholders to influence the decisions of managers, despite overwhelming
shareholder support, is a breakdown in what process or mechanism?
Auditing
Public finance
Corporate governance
Public reporting
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.
69.
Award: 10.00 points
70.
Award: 10.00 points
Real assets are _______.
assets used to produce goods and services
always the same as financial assets
always equal to liabilities
claims on a company’s income
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 01-02 Distinguish
between real assets and financial assets.
A major cause of the mortgage market meltdown in 2007 and 2008 was linked to _______.
private equity investments
securitization
negative analyst recommendations
online trading
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 01-06 Explain the
causes and consequences of the financial
crisis of 2008–2009.
71.
Award: 10.00 points
72.
Award: 10.00 points
In recent years the greatest dollar amount of securitization occurred for which type of loan?
Home mortgages
Credit card debt
Automobile loans
Equipment leasing
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 01-06 Explain the
causes and consequences of the financial
crisis of 2008–2009.
Which of the following is (are) true about nonconforming mortgage loans?
They are also known as subprime loans.
They have higher default risk than conforming loans.
They were able to be offered without due diligence.
All of the choices are correct.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 01-06 Explain the