Exam1Fall09x (1) - Exam 1 Fall 2009 Fin 331 Name 1 The...

Exam 1, Fall 2009, Fin 331 Name _________________________________
1. The material wealth of society is determined by the economy's __________, which is a
function of the economy's __________.
a. Investment bankers, financial assets
b. Investment bankers, real assets
c. Productive capacity, financial assets
d. Productive capacity, real assets
2. Asset allocation refers to the __________.
a. Allocation of the investment portfolio across broad asset classes
b. Analysis of the value of securities
c. Choice of specific assets within each asset class
d. None of the answers define asset allocation
3. Money market securities are sometimes referred to as "cash equivalent" because
a. They are safe and marketable
b. They are not liquid
c. They are high risk
d. They are low denomination
4. Which one of the following provides the best example of securitization?
a. Convertible bond
b. Call option
c. Mortgage backed bonds
d. Preferred stock
5. Currently the Dow Jones Industrial Average is computed by __________.
a. Adding the prices of 30 large "blue-chip" stocks and dividing by 30
b. Calculating the total market value of the 30 firms in the index and dividing by 30
c. Measuring the current total market value of the 30 stocks in the index relative to the total value
on the previous day
d. Adding the prices of 30 large "blue-chip" stocks and dividing by a divisor adjusted for stock
splits and large stock dividends
6. . Which one of the following is an example of a dealer market?
a. Residential real estate market
b. Market for large block security transactions
c. Primary market for securities
d. NASDAQ

7. The price quotations of treasury bonds in the Wall Street Journal show a bid price of 102.12
and an ask price of 102.24. If you sold the bond you expect to receive __________.