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Multiple Choice Quiz
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1.
There would be no _______________ in an efficient stock market.
A)underpriced or overpriced stocks
B)returns higher than 100%
C)commission costs
D)taxes
2.
A _______________ represents an ownership share in a corporation.
A)bond
B)preferred stock
C)common stock
D)All of the above.
3.
In securities markets, the risk-return trade-off implies that assets with higher risk will offer investors _______________ expected returns.
A)higher
B)lower
C)the same
D)None of the above.
4.
Allocation of the investment portfolio across broad asset classes refers to the _______________.
A)security analysis
B)top-down portfolio construction
C)asset allocation
D)None of the above.
5.
Commercial banks are _______________.
A)lending institutions
B)borrowing institutions
C)commercial intermediaries
D)financial intermediaries
6.
Investors can purchase new issues of securities in the _______________ market.
A)secondary
B)primary
C)new
D)IPO
7.
American Depository Receipts are claims to _______________.
A)foreign stocks
B)American stocks
C)North American stocks
D)European stocks
8.
Firms that specialize in helping companies raise capital by selling securities are called _______________.
A)industrial banks
B)commercial banks
C)investment banks
D)None of the above.
9.
_______________ are financial assets.
A)Options
B)Factories
C)Commercial properties
D)All of the above are financial assets.
10.
Portfolio manager with a passive investment strategy will manage a portfolio by ______________.
A)holding a diversified portfolio
B)selecting mispriced securities
C)timing the performance of securities
D)None of the above.
11.
Agency problems of a corporation are _______________.
A)conflicts among different stockholders
B)conflicts between managers and suppliers
C)conflicts among managers
D)conflicts between manages and stockholders
12.
When Carly Fiorini, the former CEO of Hewlett-Packard, proposed a merger with Compaq Computer, Walter Hewlett, son of the company's founder engaged in a _______________ to block the merger.
A)law suit
B)boycott
C)proxy fight
D)poison bill
13.
Corporate bonds are _______________ securities.
A)fixed-income
B)money-market
C)derivatives
D)real
14.
Mutual funds are _______________ companies.
A)private
B)investment
C)funding
D)banking





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