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Quiz1 solutions - Chapter 1 The Investment Environment...

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Chapter 1 The Investment Environment Multiple Choice Questions 1. In 2005, ____________ was the most significant real asset of U. S. nonfinancial businesses in terms of total value. A) equipment and software B) inventory C) real estate D) trade credit E) marketable securities Answer: C Difficulty: Easy Rationale: See Table 1.4. 2. In 2005, ____________ was the least significant real asset of U. S. nonfinancial businesses in terms of total value. 3. In 2005, ____________ was the least significant liability of U. S. nonfinancial businesses in terms of total value. 1
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4. In 2005, ____________ was the most significant financial asset of U. S. nonfinancial businesses in terms of total value. 5. The material wealth of a society is equal to the sum of _________. A) all financial assets B) all real assets C) all financial and real assets D) all physical assets E) none of the above Answer: B Difficulty: Easy Rationale: Financial assets do not directly contribute the productive capacity of the economy. 6. ____________ of an investment bank. 7. _______ are financial assets.
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Chapter 1 The Investment Environment 8. An example of a derivative security is ______. 9. _______ was the first to introduce mortgage pass-through securities. A) Chase Manhattan B) Citicorp C) FNMA D) GNMA E) None of the above Answer: D Difficulty: Easy 10. A bond issue is broken up so that some investors will receive only interest payments while others will receive only principal payments, which is an example of ________.
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