1
The material wealth of a society is a function of _________.
A)
all real assets
B)
all financial assets
C)
all physical assets
D)
all real and financial assets
E)
none of the above
2
Asset allocation refers to ____________.
A)
choosing which securities to hold based on their valuation
B)
investing only in "safe" securities
C)
the allocation of assets into broad asset classes
D)
bottom-up analysis
E)
all of the above
3
The Sarbanes-Oxley Act ____________.
A)
requires corporations to have more independent directors
B)
requires the firm's CFO to personally vouch for the firm's accounting statements
C)
prohibits auditing firms from providing other services to clients
D)
A and B are correct
E)
A, B, and C are correct
4
Financial intermediaries differ from other businesses in that both their assets and their liabilities are mostly
A)
illiquid.
B)
owned by government.
C)
real.
D)
financial.
E)
regulated.
5
Although derivatives can be used as speculative instruments, businesses most often use them to
A)
hedge risk.
B)
offset debt.
C)
appease stockholders.
D)
attract customers.
E)
enhance their balance sheets.
6
During the period between 2000 and 2002, a large number of scandals were uncovered. Most of these scandals were related to
- Manipulation of financial data to misrepresent the actual condition of the firm.
- Misleading and overly optimistic research reports produced by analysts.
- Allocating IPOs to executives as a quid pro quo for personal
favors.
- Greenmail.
A)
II, III, and IV
B)
I, II, and IV
C)
II and IV
D)
I, III, and IV
E)
I, II, and III
7
Financial assets
A)
contribute to the country's productive capacity both directly and indirectly.
B)
do not contribute to the country's productive capacity either directly or indirectly.
C)
directly contribute to the country's productive capacity.
D)
indirectly contribute to the country's productive capacity.
E)
are of no value to anyone.
8
What roles do investment bankers perform?
A)
design securities with desirable properties
B)
market new stock and bond issues for firms
C)
provide advice to the firms as to market conditions, price, etc.
D)
none of the above
E)
A, B, and C
9
Which of the following is true about mortgage-backed securities?
- They aggregate individual home mortgages into homogeneous pools.
- The purchaser receives monthly interest and principal payments received from payments made on the pool.
- The banks that originated the mortgages maintain ownership of them.
- The banks that originated the
mortgages continue to service them.
A)
II, III, and IV
B)
I, II, and IV
C)
II and IV
D)
I, III, and IV
E)
I, II, III, and IV
10
________ are in essence an insurance contract against the default of one or more borrowers.
A)
Credit default swaps
B)
CMOs
C)
ETFs
D)
Collateralized debt obligations
E)
all of the above