Investment Analysis Exam 1 Study Questions
1.Financial Assets: Indirectly contribute to the country's productive
capacity
2.The largest component of domestic net worth in 2021 was:: residential
real estate
3.A fixed-income security pays: a fixed stream of income or a stream of
income that is determined according to a specified formula for the life
of the security.
4.Money market securities: are short term, highly marketable, and
generally very low risk
5.Although derivatives can be used as speculative instruments,
businesses most often use them to: hedge risks
6.Financial assets permit all of the following except: elimination of risk
7.A disadvantage of using stock options to compensate managers is that: it
can create an incentive for managers to manipulate information to prop
up a stock price temporarily, giving them a chance to cash out before
the price returns to a level reflective of the firm's true prospects.
8.Asset allocation refers to: the allocation of assets into broad asset
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, classes
9.Which of the following portfolio construction methods starts with
security analysis?: Bottom Up
10.Financial intermediaries exist because small investors cannot
efficient- ly: diversify their portfolios, assess credit risk of borrowers,
advertise for needed investments
11.Investment bankers perform which of the following roles?: Market new
stock and bond issues for firms, provide advice to the firms as to
market conditions, price, design securities with desirable properties
12.What 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 may continue to service them
13.A major problem experienced by cryptocurrency, which makes it
problem- atic to store value is: price volatility
14. were designed to concentrate the credit risk of a bundle of loans on
one class of investor, leaving the other investors in the pool: Collateralized
debt obligations
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, 15.The largest component of the fixed-income market is debt.:
Trea- sury
16.Commercial paper is a short-term security issued by to raise
funds.: large, well-known companies
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1.Financial Assets: Indirectly contribute to the country's productive
capacity
2.The largest component of domestic net worth in 2021 was:: residential
real estate
3.A fixed-income security pays: a fixed stream of income or a stream of
income that is determined according to a specified formula for the life
of the security.
4.Money market securities: are short term, highly marketable, and
generally very low risk
5.Although derivatives can be used as speculative instruments,
businesses most often use them to: hedge risks
6.Financial assets permit all of the following except: elimination of risk
7.A disadvantage of using stock options to compensate managers is that: it
can create an incentive for managers to manipulate information to prop
up a stock price temporarily, giving them a chance to cash out before
the price returns to a level reflective of the firm's true prospects.
8.Asset allocation refers to: the allocation of assets into broad asset
1
/16
, classes
9.Which of the following portfolio construction methods starts with
security analysis?: Bottom Up
10.Financial intermediaries exist because small investors cannot
efficient- ly: diversify their portfolios, assess credit risk of borrowers,
advertise for needed investments
11.Investment bankers perform which of the following roles?: Market new
stock and bond issues for firms, provide advice to the firms as to
market conditions, price, design securities with desirable properties
12.What 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 may continue to service them
13.A major problem experienced by cryptocurrency, which makes it
problem- atic to store value is: price volatility
14. were designed to concentrate the credit risk of a bundle of loans on
one class of investor, leaving the other investors in the pool: Collateralized
debt obligations
2
/16
, 15.The largest component of the fixed-income market is debt.:
Trea- sury
16.Commercial paper is a short-term security issued by to raise
funds.: large, well-known companies
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