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1. Financial assets represent _____ of total assets of U.S. households.
2. Real assets in the economy include all but which one of the following?
3. Net worth represents _____ of the liabilities and net worth of commercial banks.
4. According to the
Flow of Funds Accounts of the United States,
the largest single asset of
U.S. households is ___.
5. According to the
Flow of Funds Accounts of the United States,
the largest liability of U.S.
households is ________.
6. ____ is
not
a derivative security.
7. According to the
Flow of Funds Accounts of the United States,
the largest financial asset
of U.S. households is ____.
8. Active trading in markets and competition among securities analysts helps ensure that:
I. Security prices approach informational efficiency
II. Riskier securities are priced to offer higher potential returns
III. Investors are unlikely to be able to consistently find under- or overvalued securities
9. The material wealth of society is determined by the economy's _________, which is a
function of the economy's _________.
10. Which of the following is
not
a money market security?
11. __________ assets generate net income to the economy, and __________ assets define
allocation of income among investors.
12. Which of the following are financial assets?
I. Debt securities
II. Equity securities
III. Derivative securities
13. __________ are examples of financial intermediaries.
14.
Asset allocation
refers to _________.
15. Which one of the following best describes the purpose of derivatives markets?
16. More than _____________ of currency is traded each day in the market for foreign
exchange.
17.
Security selection
refers to the ________.
18. Which of the following is an example of an agency problem?
19. _____ is a mechanism for mitigating potential agency problems.
20. __________ is (are) real assets.
21. __________ portfolio construction starts with selecting attractively priced securities.
22. In a market economy, capital resources are primarily allocated by ____________.
23. __________ represents an ownership share in a corporation.
24. The value of a derivative security _________.
25. Commodity and derivative markets allow firms to adjust their _________.
26. __________ portfolio management calls for holding diversified portfolios without spending
effort or resources attempting to improve investment performance through security analysis.
27. Financial markets allow for all but which one of the following?
28. Financial intermediaries exist because small investors cannot efficiently _________.
29. Methods of encouraging managers to act in shareholders' best interest include:
I. Threat of takeover
II. Proxy fights for control of the board of directors
III. Tying managers' compensation to stock price performance
30. Firms that specialize in helping companies raise capital by selling securities to the public
are called _________.
31. In securities markets, there should be a risk-return trade-off with higher-risk assets
having _________ expected returns than lower-risk assets.
32. When the market is more optimistic about a firm, its share price will ______; as a result, it
will need to issue _______ shares to raise funds that are needed.
33.
Security selection
refers to _________.
34. An example of a derivative security is _________.
35. __________ portfolio construction starts with asset allocation.
36. Which one of the following firms falsely claimed to have a $4.8 billion bank account at
Bank of America and vastly understated its debts, eventually resulting in the firm's bankruptcy?
37. Debt securities promise:
I. A fixed stream of income
II. A stream of income that is determined according to a specific formula
III. A share in the profits of the issuing entity
