Exam 1: The Investment Environment

During the period between 2000 and 2002, a large number of scandals were uncovered. Most of these scandals were related to I) manipulation of financial data to misrepresent the actual condition of the firm. II) misleading and overly optimistic research reports produced by analysts. III) allocating IPOs to executives as a quid pro quo for personal favors. IV) greenmail.

In 2016, which of the following financial assets make up the greatest proportion of the financial assets held by U.S. households?

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

________ 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.

Security selection refers to

In 2016, ____________ was the most significant financial asset of U.S. households in terms of total value.

Theoretically, takeovers should result in

Corporate shareholders are best protected from incompetent management decisions by

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

In 2016, ____________ was(were) the least significant liability(ies) of U.S. nonfinancial businesses in terms of total value.

The domestic net worth of the U.S. in 2016 was

An example of a derivative security is

In 2016, ____________ were the most significant liability of U.S. households in terms of total value.

In 2016, ____________ was the least significant financial asset of U.S. households in terms of total value.

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

A debt security pays

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

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

Investment bankers perform which of the following role(s)?

_________ financial asset(s).