Exam 1: Investments: Background and Issues

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Methods to encourage managers to act in shareholders' best interest include I. Threat of takeover II. Proxy fights for control of the Board of Directors III. Tying managers' compensation to share price performance

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

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An important trend that has changed the contemporary investment market is ________.

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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.

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Real assets in the economy include all but which one of the following?

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________ portfolio construction starts with selecting attractively priced securities.

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Security selection refers to ________.

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________ is a mechanism to mitigate potential agency problems.

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After much investigation an investor finds that Intel shares are currently under-priced. This is an example of ________.

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The value of a derivative security ________.

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In 2011 mortgages represented approximately ________ per cent of the total liabilities and net worth of Australian households.

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After considering current market conditions an investor decides to place 60% of their funds in equities and the rest in bonds. This is an example of ________.

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

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

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

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Financial assets represent ________ of total assets of Australian households in 2011.

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

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Asset allocation refers to the ________.

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According to Australian household balance sheet, the largest financial asset of Australian households is ________.

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Debt securities promise ________. I. a fixed stream of income II. a stream of income that is determined according to a specific formula III. a share in the profits of the issuing entity

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