Exam 1: Investments: Background and Issues

Money Market securities are characterized by ________. I.maturity less than one year II.safety of the principal investment III.low rates of return

The material wealth of society is determined by the economy's _________,which is a function of the economy's _________.

The average rate of return on U.S.Treasury bills since 1926 was _________.

Firms that specialize in helping companies raise capital by selling securities to the public are called _________.

An example of a real asset is _________. I.a college education II.customer goodwill III.a patent

A __________ represents an ownership share in a corporation.

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?

Stone Harbor Products takes out a bank loan.It receives $100,000 and signs a promissory note to pay back the loan over 5 years.

In 2008 real assets represented approximately __________ percent of the total asset holdings of American households.

Financial markets allow for all but which one of the following?

__________ portfolio construction starts with asset allocation.

__________ assets generate net income to the economy and __________ assets define allocation of income among investors.

An intermediary that pools and manage funds for many investors is called a/an ______.

Brady bonds were an example of _________.

Suppose an investor is considering one of two investments which are identical in all respects except for risk.If the investor anticipates a fair return for the risk of the security they invest in they can expect to

Which one of the following best describes the purpose of derivatives markets?

__________ portfolio construction starts with selecting attractively priced securities.

An example of a derivative security is _________.

In recent years the greatest dollar amount of securitization occurred for which type loan?

Individuals may find it more advantageous to purchase claims from a financial intermediary rather than directly purchasing claims in capital markets because I.intermediaries are better diversified than most individuals II.intermediaries can exploit economies of scale in investing that individual investors cannot III.intermediated investments usually offer higher rates of return than direct capital market claims