A- A Software Company develops new software. It sells the software to Microsoft in exchange for 1000 shares of Microsoft stock. The Company has exchanged (sold) a ___ asset for a ___ asset in this transaction:

1- financial, financial

2- financial, real

3- real, real

4- real, financial

B- __________ assets generate net income to the economy and __________ assets define allocation of income among investors.

1- Financial, financial 2- Financial, real 3- Real, financial 4- Real, real

C-Security selection refers to the ________.

1- allocation of the investment portfolio across broad asset classes 2- analysis of the value of securities 3- choice of specific securities within each asset class 4- top down method of investing

D- In the financial markets, financial intermediaries ____________.

1- are considered "major players" who are net lenders 2- are considered "major players" who are net borrowers 3- bring lenders and borrowers together 4- raise funds by borrowing in order to invest in real assets

E- Which of the following is a characteristic of an efficient financial market?

1- Absence of underpriced or overpriced securities 2- Abundance of bargain opportunities 3- Necessity of active portfolio management 4- Focus on security analysis

F- __________ portfolio construction starts with asset allocation. *

1-Bottom-up 2-Top-down 3-Upside-down 4-Side-to-side

G-An investment advisor has decided to purchase gold, real estate, stocks, and bonds in equal amounts. This decision reflects which part of the investment process? * 1- Asset allocation 2- Investment analysis 3-Portfolio analysis 4-Security selection

H- Under firm commitment underwriting the ______ assumes the full risk that the shares cannot be sold to the public at the stipulated offering price. 1-initial stockholder 2-issuing company 3-underwriter 4-None of the statements are true

I- __________ portfolio construction starts with selecting attractively priced securities.

1-Bottom-up 2-Top-down 3-Upside-down 4-Side-to-side

J- Which of the following observations concerning financial assets is true?

1- They generate net income to the economy. 2- They include the knowledge that can be used to produce goods and services. 3- They are claims to the income generated by real assets. 4- They contribute directly to the productive capacity of the economy.

K- Primary market refers to the market

1- that attempts to identify mispriced securities and arbitrage opportunities

2- in which investors trade already issued securities

3-where new issues of securities are offered

4-in which securities with custom-tailored characteristics are designed

L- The efficient markets hypothesis suggests that the most appropriate investment strategies are:

1-passive portfolio management strategies 2-active portfolio management strategies 3-a bottom-up approach

4-either active or passive strategies may be appropriate

M- Which term refers to the valuation of securities included in a portfolio?

1- Unbundling 2-Security analysis 3-Asset allocation 4-Security selection

N- Asset allocation refers to the _________.

1- allocation of the investment portfolio across broad asset classes 2- analysis of the value of securities 3- choice of specific assets within each asset class 4- none of the answers define asset allocation

O-In recent years the greatest dollar amount of securitization occurred for which type loan?

1- Equipment leasing 2- Automobile loans 3- Credit card debt 4-Home mortgage