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What are the differences between equity and fixed-income securities? What is the difference between asset allocation and security selection? What are the differences between real
- What are the differences between equity and fixed-income securities?
- What is the difference between asset allocation and security selection?
- What are the differences between real and financial assets?
- Why would you expect securitization to take place only in highly developed capital markets?
- Give an example of three financial intermediaries, and explain how they act as a bridge between small investors and large capital markets or corporations.
- The average rate of return on investments in large stocks has outpaced that on investments in Treasury bills by about 7% since 1926. Why, then, does anyone invest in Treasury bills?
- Discuss the advantages and disadvantages of the following forms of managerial compensation in terms of mitigating agency problems, that is, potential conflicts of interest between managers and shareholders.
| a. | A fixed salary. |
| b. | Stock in the firm that must be held for five years. |
| c. | A salary linked to the firm's profits. |
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