Exam 1: The Investment Environment

A debt security pays

Commercial banks differ from other businesses in that both their assets and their liabilities are mostly

________ specialize in helping companies raise capital by selling securities.

A common measure of credit risk in the banking sector is

An example of a derivative security is

Corporate shareholders are best protected from incompetent management decisions by

The sale of a mortgage portfolio by setting up mortgage pass-through securities is an example of

In 2016, ____________ was(were) the most significant real asset(s) of U.S.nonfinancial businesses in terms of total value.

In 2016, ____________ was(were) the most significant financial asset(s) of U.S.commercial banks in terms of total value.

The means by which individuals hold their claims on real assets in a well-developed economy are

Mortgage-backed securities were created when ________ began buying mortgage loans from originators and bundling them into large pools that could be traded like any other financial asset.

The spread between the LIBOR and the Treasury-bill rate is called the

The ____________ refers to the potential conflict between management and shareholders.

New issues of securities are sold in the ________ market(s).

Holding highly diversified portfolios without spending effort or other resources attempting to improve investment performance through security analysis is a characteristic of

A security that pays a specified cash flow over a specific period is called

Financial intermediaries exist because small investors cannot efficiently

Which of the following are mechanisms that have evolved to mitigate potential agency problems? I) Using the firm's stock options for compensation II. Hiring bickering family members as corporate spies III. Boards of directors forcing out underperforming management IV. Security analysts monitoring the firm closely V. Takeover threats

Investors trade previously issued securities in the ________ market(s).

_________ is a commodity.