1.) In 2007, _________ was the most significant real asset of U.

S households in terms
of total value.
2.) In 2007,_________ was the least significant financial assets of U.S households in
terms of total value
3.) In 2007, __________ was the most significant liability of U.S households in terms of
total value.
4.) The largest component of domestic net worth in 2007 was ______
5.) In 2007, ______ was the least significant liability of U.S nonfinancial businesses in
terms of total value.
6.) In terms of total value, the most significant liability of U.S nonfinancial businesses
in 2007 was.
7.) The material wealth of a society is equal to the sum of_____
8.) Examples of investment banks
9.) _____ are financial assets
10.)
An example of a derivative security is ____.
11.)
A bond issue is broken up so that some investors will revieve only interest
payments while others receive only principlal payments, which is an example
of______
12.)
An example of a primitive security is _____
13.)
The ______ refers to potential conflict between management and
shareholders due to managements control of pecuniary rewards as well as the
possibility of incompetent performance by managers.
14.)
_____ are real assets
a. Land
b. Machines
c. Stocks and Bonds
d. Knowledge
e. Land, Machines, and knowledge
15.)
The value of a derivative security.
16.)
Money market funds were a financial innovation partly inspired to
circumvent _____.
17.)
_______ are a way U.S investor can invest in foreign companies,
18.)
_____ are examples of financial intermediaries
19.)
Financial intermediaries exist because small investors cannot efficiently
______
20.)
Firms that specialize in helping companies raise capital by selling
securities are called____
21.)
Financial assets ____
22.)
The sale of a mortgage portfolio by setting up mortgage pass-through
securities is an example of _____
23.)
Corporate shareholders are best protected from incompetent management
decisions by _______
24.)
Investment bankers perform the following role(s)
25.)
Theoretically, takeovers should result in ____
26.)
The means by which individuals hold their claims on real assets in a welldeveloped economy are
a. Investment assets
b. Depository assets

27.)

c. Derivative assets
d. Financial assets
e. Exchange driven assets
Which of the following financial assets made up the greatest proportion of

the financial assets held by U.S households?

28.)
Mechanisms that have evolved to mitigate potential agency problems
29.)
Commercial banks differ from other businesses in that both their assets
and their liabilities are mostly
30.)
Which of the following is true about GNMA pass-through
31.)
Although derivatives can be used as speculative instruments, businesses
most often use them to
32.)
An ETF
33.)
A country ETF
34.)
What is a disadvantage of using stock options to compensate mangers
a. It encourages mangers to undertake projects that will increase stock price
b. It encourages managers to engage in empire building
c. It can create
35.)
Money market securities ________
a. Are short term
b. Pay a fixed income
c. Are highly marketable
d. Generally very low risk
36.)
Financial assets permit all of the following except
a. Consumption timing
b. Allocation of risk
c. Separation of ownership and control
d. Elimination of risk
37.)
The Sarbanes-Oxley Act
a. Requires corporations to have more independent directors
b. Requires the firms CFO to personally vouch for the firms accounting
statements
c. Prohibits auditing firms from providing other services to clients
d. Requires corporations to have more independent directors and requires
38.)
a.
b.
c.
d.
39.)

the firms CFO to personally vouch

Asset allocation refers to
Choosing which securities to hold based on their valuation
Investing only in safe securities
The allocation off assets into broad asset classes
Bottom-up analysis
Which of the following portfolio construction method starts with security

analysis
40.)
Until 1999, the _____ acts prohibited banks in the United states from both
accepting depostis and underwriting securities
a. Sarbanes-Oxley
b. Glass- Steagall
c. SEC
d. Sarbanes-Oxley and SEC
e. None of the above
41.)
Which of the following portfolio construction methods starts with asset
allocation.

42.)

Which of the following are mechanisms that have evolved to mitigate

potential agency problems?

a. Using the firms stock options for compensation
b. Hiring bickering family members as corporate spies
c. Boards of directors forcing out underperforming management
d. Security analysts monitoring the firm closely
e. Takeover threats