TEST BANK FOR Essentials Of Investments 12th Edition Zvi Bodie, Alex Kane, Alan J. Marcus Chapter 1-22 Answers are at the end of Each Chapter Chapter 1 Student name: MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question. 1) Financial assets represent of total assets of U.S. households in 2019.
A) B) C) D)
2)
about 70% over 90% under 10% about 30%
Real assets in the economy include all but which one of the following?
A) B) C) D)
Land Buildings Consumer durables Common stock
3) In 2019, net worth represented banks.
A) B) C) D)
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of the liabilities and net worth of commercial
about 51% about 91% about 11% about 31%
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4) According to the Flow of Funds Accounts of the United States, the largest single asset of U.S. households is . A) B) C) D)
mutual fund shares real estate pension reserves corporate equity
5) According to the Flow of Funds Accounts of the United States, the largest liability of U.S. households is .
A) B) C) D)
6)
mortgages consumer credit bank loans gambling debts
is not a derivative security.
A) B) C) D)
A share of common stock A call option A futures contract A put option
7) According to the Flow of Funds Accounts of the United States, the largest financial asset of U.S. households is .
A) B) C) D)
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mutual fund shares corporate equity pension reserves deposits
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8) Active trading in markets and competition among securities analysts helps ensure that: 1. Security prices approach informational efficiency. 2. Riskier securities are priced to offer higher potential returns. 3. Investors are unlikely to be able to consistently find under- or overvalued securities. A) B) C) D)
1 only 1 and 2 only 2 and 3 only 1, 2, and 3
9) The material wealth of society is determined by the economy's function of the economy's .
A) B) C) D)
10)
, which is a
investment bankers; financial assets investment bankers; real assets productive capacity; financial assets productive capacity; real assets
Which of the following is not a money market security?
A) B) C) D)
U.S. Treasury bill 6-month maturity certificate of deposit common stock mortgage backed security
11) assets generate net income to the economy, and allocation of income among investors.
A) B) C) D)
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assets define
Financial; financial Financial; real Real; financial Real; real
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12) Which of the following are financial assets? 1. Debt securities 2. Equity securities 3. Derivative securities A) B) C) D)
13)
are examples of financial intermediaries.
A) B) C) D)
14)
Commercial banks Insurance companies Investment companies All of the choices are correct.
Asset allocation refers to
A) B) C) D)
15)
1 only 1 and 2 only 2 and 3 only 1, 2, and 3
.
the allocation of the investment portfolio across broad asset classes the analysis of the value of securities the choice of specific assets within each asset class None of the choices are correct.
Which one of the following best describes the purpose of derivatives markets?
A) B) C) D)
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Transferring risk from one party to another. Investing for a short time period to earn a small rate of return. Investing for retirement Earning interest income
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16)
Security selection refers to the
A) B) C) D)
17)
.
allocation of the investment portfolio across broad asset classes analysis of the broad asset classes choice of specific securities within each asset class top-down method of investing
Which of the following is an example of an agency problem?
A) B) C) D)
18)
Managers engage in empire building. Managers protect their jobs by avoiding risky projects. Managers overconsume luxuries such as corporate jets. All of the options are examples of agency problems.
is (are) a mechanism for mitigating potential agency problems.
A) B) C) D)
19)
Tying income of managers to success of the firm Directors defending top management Antitakeover strategies All of the choices are correct.
is (are) real assets.
A) B) C) D)
20)
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Bonds Production equipment Stocks Life insurance
portfolio construction starts with selecting attractively priced securities.
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