Security Investment Quiz Chap 1

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Course| SECURITIES INVEST (Fa12)|
Test| Chapter 1 self assessment|
Started| 9/8/12 4:38 PM|
Submitted| 9/8/12 5:00 PM|
Status| Completed|
Score| 34 out of 34 points  |
Time Elapsed| 21 minutes.|
Instructions| |
* Question 1
1 out of 1 points
| |
| Corporate shareholders are best protected from incompetent management decisions by Answer| | | | | Selected Answer:|    the threat of takeover by other firms.| Correct Answer:|    the threat of takeover by other firms.| Response Feedback:|  Proxy fights are expensive and seldom successful, and management may often control the board or own significant shares. It is the threat of takeover of underperforming firms that has the strongest ability to keep management on their toes. |

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* Question 2
1 out of 1 points
| |
| _________ financial asset(s). Answer| | | |
| Selected Answer:|    Derivatives and U.S. Agency bonds are| Correct Answer:|    Derivatives and U.S. Agency bonds are| Response Feedback:| Land and Buildings are real assets.|
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* Question 3
1 out of 1 points
| |
| The sale of a mortgage portfolio by setting up mortgage pass-through securities is an example of ________. Answer| | | | | Selected Answer:|    securitization|
Correct Answer:|    securitization|
Response Feedback:| The financial asset is secured by the mortgages backing the instrument.|
| | | |
* Question 4
1 out of 1 points
| |
| Financial intermediaries exist because small investors cannot efficiently ________. Answer| | | | | Selected Answer:|    diversify their portfolios, assess credit risk of borrowers, or advertise for needed investments| Correct Answer:|    diversify their portfolios, assess credit risk of borrowers, or advertise for needed investments| Response Feedback:| The individual investor cannot efficiently and effectively perform any of the tasks above without more time and knowledge than that available to most individual investors.|

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* Question 5
1 out of 1 points
| |
| Theoretically, takeovers should result in ___________. Answer| | | | | Selected Answer:|    improved management and increased stock price| Correct Answer:|    improved management and increased stock price| Response Feedback:|  Theoretically, when firms are taken over, better managers come in and thus increase the price of the stock; existing management often must either leave the firm, be demoted, or suffer a loss of existing benefits. |

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* Question 6
1 out of 1 points
| |
| ________ were designed to concentrate the credit risk of a bundle of loans on one class of investor, leaving the other investors in the pool relatively protected from that risk. Answer| | | | | Selected Answer:|    Collateralized debt obligations| Correct Answer:|    Collateralized debt obligations|

Response Feedback:| Collateralized debt obligations were designed to concentrate the credit risk of a bundle of loans on one class of investor, leaving the other investors in the pool relatively protected from that risk.|

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* Question 7
1 out of 1 points
| |
| The value of a derivative security _______. Answer| | | | | Selected Answer:|    depends on the value of the related security| Correct Answer:|    depends on the value of the related security| Response Feedback:| Of the factors cited, only the value of the related security affects the value of the derivative and/or is a true statement.|

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* Question 8
1 out of 1 points
| |
| Financial assets ______. Answer| | | |
| Selected Answer:|    indirectly contribute to the country's productive capacity| Correct Answer:|    indirectly contribute to the country's productive capacity| Response Feedback:| Financial assets indirectly contribute to the country's productive capacity because these assets...
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