econ 201 week 3 quiz - Quiz for Week 3 Econ 201A Winter...

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il ii Quiz for Week 3 - Econ 201A - Winter 2010 Chapter 3 (first lecture) 1. The paramount principle of securities market regulation in the US is that: a) A company cannot make more than a 'reasonable' profit. b) If a company goes bankrupt the management is legally liable to the shareholders for losses they incur. n {$ Full disclosure of all material facts. d) 'lnsiders' can never own stock in the company they work for. 2. An example of $yjlg being traced directly to net investment in the economy is: -a) Jones buys 100 shares of Microsoft from Smith'---; b) Jones buys 100 shares of Microsoft from Smith with money saved from his bonus. f? O" sells new shares of its stock to raise funds to build a new factory. Jones buys 100 Yf thos" new shares with money raised from the sale of 100 shares of Microsoft to Smith -who got the cash to buy them by not spending her year-end bonus. \ Smith borrows $33,000 from
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Unformatted text preview: uses the cash to buy 1,000 shares of Microsoft. 3. One advantage of buying a bond instead of a stock is that you are protected from loss by the obligation of the borrower to repay, but you still participate in profits if the comDanv does better than forecast.-:t\ t :t\ *iR)Trud blFalse-v \J 4. A saver who valyps liquidity very highly would most likely invest in -. h)a pension fun{b)a bank; b) a life insurance policy; d) the Federal Deposit Insurance Corporation; e) aYutual fund holding stocks 5. The type of mutual fund known as an "index fund" has which type of investment strategy?-\ .glinvesting in stocks contained in a popular index of the stock market $ adjusting dividends using an index of the cost of living b) investing in an index of other mutual funds d) picking stocks that they hope will beat a market index e) none of these...
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  • Spring '08
  • SALEHIE
  • Business, Macroeconomics, life insurance policy, Federal Deposit Insurance, securities market regulation

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