5.The primary risk of mortgage-backed securities is ________.

that the prices of have high volatality

that the government will not be able to meet the guarantees on the cash flows

that the prices of housing will increase

that homeowners may not be able to, or choose not to, repay their loans

6.

Which of the following represents a way of coping with uncertainty in a cash budget?

developing a pro forma income statement to forecast sales and then express the various income statement items as percentage of projected sales

careful estimation of cash budgets outputs

always using the prior year's data for estimates of the future

using scenario analysis, or "what if" approach, to analyze cash flows under a variety of circumstances

7.

Which of the following acts regulates the primary market in which securities are originally issued to the public?

The Securities Exchange Act of 1934

The Securities Act of 1933

The Glass-Steagall Act

The Gramm-Leach-Bliley Act

8.

Which of the following is the best measure to ensure that management decisions are in the best interest of the stockholders?

fire managers who are inefficient

tie management compensation to the performance of the company's common stock price

remove management's perquisites

tie management compensation to the level of dividend per share