QUIZ 1 – INVESTMENT MANAGEMENT

____ 1. These are assets used to produce goods and a. asset allocation
services. b. security selection
a. Financial Assets c. security analysis
b. Real Assets d. diversification
c. Non-current Assets ____ 12.This explains why assets with higher expected
d. Liquid Assets returns entail greater risk.
____ 2. These are claims on real assets or the income a. Efficient Market
generated by them b. Risk-Return Trade-off
a. Financial Assets c. Passive Management
b. Claim Assets d. Active Management
c. Non-current Assets ____ 13.Buying and holding a diversified portfolio
d. Liquid Assets without attempting to identify mispriced securities.
____ 3. All of the following are assets used to produce a. Efficient Market
goods and services except: b. Risk-Return Trade-off
a. Land c. Passive Management
b. Building d. Active Management
c. Knowledge ____ 14.Attempting to identify mispriced securities or to
d. Bonds forecast broad market trends.
____ 4. All of the following are claims on real assets or a. Efficient Market
the income generated by them except: b. Risk-Return Trade-off
a. Patents c. Passive Management
b. Bonds d. Active Management
c. Stocks ____ 15.Institutions that “connect” borrowers and lenders
d. Derivatives by accepting funds from lenders and loaning funds to
____ 5. This financial asset pays a specified cash flow borrowers.
over a specific period. a. Investment Companies
a. Debt Securities b. Investment Bankers
b. Equity Securities c. Financial Intermediaries
c. Derivative Securities d. Household
d. Insecurities ____ 16. They purchase the securities issued by firms that
____ 6. This financial asset is an ownership share in a need to raise funds.
corporation. a. Investment Companies
a. Debt Securities b. Investment Bankers
b. Equity Securities c. Financial Intermediaries
c. Derivative Securities d. Household
d. Insecurities ____ 17.Firms specializing in the sale of new securities to
____ 7. These are securities providing payoffs that depend the public, typically by underwriting the issue.
on the values of other assets. a. Investment Companies
a. Debt Securities b. Investment Bankers
b. Equity Securities c. Financial Intermediaries
c. Derivative Securities d. Household
d. Insecurities ____ 18.These are Short-term government securities
____ 8. These are conflicts of interest between managers issued at a discount from face value and returning the
and stockholders. face amount at maturity.
a. Agency Problems a. Certificate of deposit
b. Management Problems b. Treasury bills
c. Internal Conflict c. Commercial paper
d. Representation Problems d. Bankers’ Acceptances
____ 9. Choice of specific securities within each asset ____ 19.These are Short-term unsecured debt issued by
class. large corporations.
a. asset allocation a. Certificate of deposit
b. security selection b. Treasury bills
c. security analysis c. Commercial paper
d. diversification d. Bankers’ Acceptances
____ 10.Allocation of an investment portfolio across ____ 20. An order to a bank by a customer to pay a sum
broad asset classes. of money at a future date.
a. asset allocation a. Certificate of deposit
b. security selection b. Treasury bills
c. security analysis c. Commercial paper
d. diversification d. Bankers’ Acceptances
____ 11. Involves the valuation of particular securities
that might be included in the portfolio.

Part II. Enumeration

1-3 The Three Major Players in Financial Market

Part III. Explain why financial market is important for the economy. (5 pts)
Prepared by: REMAR ALLEN BAUTISTA, CPA, CTT, MBAc