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| 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 |
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| 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 |
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| 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 |
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| 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. |
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| 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. |
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| 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.
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| | A) | II, III, and IV |
| | B) | I, II, and IV |
| | C) | II and IV |
| | D) | I, III, and IV |
| | E) | I, II, and III |
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| 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. |
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| 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 |
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| 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.
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| | 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 |
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| 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 |
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