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ch1.2.3 - q uiz 1 chapter 01 1 In 2005 was the most...

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quiz 1 chapter 01 1 In 20 5, _ _ _ _ _ _ was the most significant real as et of U. S. nonfinancial busines es in terms of total value. A) equipment and software B) inventory C) real estate D) trade credit E) marketable securities Answer: C Dificulty: Easy Rationale: Se Table 1.4. 2 In 20 5, _ _ _ _ _ _ was the least significant real as et of U. S. nonfinancial busines es in terms of total value. A) equipment and software B) inventory C) real estate D) trade credit E) marketable securities Answer: B Dificulty: Easy Rationale: Se Table 1.4. 3 In 20 5, _ _ _ _ _ _ was the least significant liability of U. S. nonfinancial busines es in terms of total value. A) bonds and mortgatges B) bank loans C) inventories D) trade debt E) marketable securities Answer: B Dificulty: Easy Rationale: Se Table 1.4. _x0 0C_ 4 In 20 5, _ _ _ _ _ _ was the most significant financial as et of U. S. nonfinancial busines es in terms of total value. A) cash B) trade credit C) trade debt D) inventory E) marketable securities Answer: B Dificulty: Easy Rationale: Se Table 1.4. 5 The material wealth of a society is equal to the sum of _ _ _ _ _. A) al financial as ets B) al real as ets C) al financial and real as ets D) al physical as ets E) none of the above Answer: B Dificulty: Easy Rationale: Financial as ets do not directly contribute the productive capacity of the economy. 6 _ _ _ _ _ _ of an investment bank. A) Citigroup is an example B) Mer il Lynch is an example C) Goldman is an example D) B and C are each examples E) Each of the above is an example Answer: E Dificulty: Easy 7 _ _ _ _ are financial as ets. A) Bonds B) Machines C) Stocks D) A and C E) A, B and C Answer: D Dificulty: Easy Rationale: Machines are real as ets; stocks and bonds are financial as ets. _x0 0C_ 8 An example of a derivative security is _ _ _ . A) a common share of General Motors B) a cal option on Mobil stock C) a commodity futures contract D) B and C E) A and B Answer: D Dificulty: Easy Rationale: The values of B and C are derived from that of an underlying financial as et; the value of A is based on the value of the firm only. 9 _ _ _ _ was the first to introduce mortgage pas -through securities. A) Chase Manhat an B) Citicorp C) FNMA D) GNMA E) None of the above Answer: D Dificulty: Easy 10 A bond is ue is broken up so that some investors wil receive only interest payments while others wil receive only principal payments, which is an example of _ _ _ _ . A) bundling B) credit enhancement C) unbundling D) financial engine ring E) C and D Answer: E Dificulty: Easy Rationale: Unbundling is one of many examples of financial engine ring that ofer more alternatives to the investor. 1 An example of a primitive security is _ _ _ _ _ . A) a common share of General Motors B) a cal option on Mobil stock C) a cal option on a stock of a firm based in a Third World country D) a U. S. government bond E) A and D Answer: E Dificulty: Easy Rationale: A primitive security's return is based only upon the earning power of the is uing agency, such as stock in General Motors and the U. S. government.
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