寂寂无言30. The Sarbanes-Oxley Act
A. requires corporations to have more independent directors.
B. requires the firm's CFO to personally vouch for the firm's accounting statements.
C. prohibits auditing firms from providing other services to clients.
D. requires corporations to have more independent directors and requires the firm's CFO
to personally vouch for the firm's accounting statements.
E. All of the options
The Sarbanes-Oxley Act does all of the above.
AACSB: Analytic Blooms: Remember Difficulty: Intermediate
Topic: Regulation
31. Asset allocation refers to
A. choosing which securities to hold based on their valuation.
B. investing only in \
C. the allocation of assets into broad asset classes.
D. bottom-up analysis.
Asset allocation refers to the allocation of assets into broad asset classes.
AACSB: Analytic Blooms: Remember Difficulty: Intermediate
Topic: Financial Management
1-41
Copyright ? 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
32. Security selection refers to
A. choosing which securities to hold based on their valuation.
B. investing only in \
C. the allocation of assets into broad asset classes.
D. top-down analysis.
Security selection refers to choosing which securities to hold based on their valuation.
AACSB: Analytic Blooms: Remember Difficulty: Intermediate
Topic: Financial Management
33. Which of the following portfolio construction methods starts with security analysis?
A. Top-down
B. Bottom-up
C. Middle-out
D. Buy and hold
E. Asset allocation
Bottom-up refers to using security analysis to find securities that are attractively priced. Top-down refers to using asset allocation as a starting point.
AACSB: Analytic Blooms: Remember Difficulty: Intermediate
Topic: Portfolios
1-42
Copyright ? 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
34. Which of the following portfolio construction methods starts with asset allocation?
A. Top-down
B. Bottom-up
C. Middle-out
D. Buy and hold
E. Asset allocation
Bottom-up refers to using security analysis to find securities that are attractively priced.
AACSB: Analytic Blooms: Remember Difficulty: Intermediate
Topic: Portfolios
35. _______ are examples of financial intermediaries.
A. Commercial banks
B. Insurance companies
C. Investment companies
D. Credit unions
E. All of the options
All are institutions that bring borrowers and lenders together.
AACSB: Analytic Blooms: Remember
Difficulty: Basic
Topic: Financial Institutions
1-43
Copyright ? 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
36. Financial intermediaries exist because small investors cannot efficiently
A. diversify their portfolios.
B. assess credit risk of borrowers.
C. advertise for needed investments.
D. diversify their portfolios and assess credit risk of borrowers.
E. All of the options
The individual investor cannot efficiently and effectively perform any of the tasks above without more time and knowledge than that available to most individual investors.
AACSB: Analytic Blooms: Remember
Difficulty: Basic
Topic: Financial Institutions
37. ________ specialize in helping companies raise capital by selling securities.
A. Commercial bankers
B. Investment bankers
C. Investment issuers
D. Credit raters
An important role of investment banking is to act as middlemen in helping firms place new issues in the market.
AACSB: Analytic Blooms: Remember
Difficulty: Basic
Topic: Financial Institutions
1-44
Copyright ? 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
38. Commercial banks differ from other businesses in that both their assets and their liabilities are mostly
A. illiquid.
B. financial.
C. real.
D. owned by the government.
E. regulated. See Table 1.3.
AACSB: Analytic Blooms: Understand
Difficulty: Basic
Topic: Financial Institutions
39. In 2012, ____________ was(were) the most significant financial asset(s) of U.S. commercial banks in terms of total value.
A. loans and leases
B. cash
C. real estate
D. deposits
E. investment securities See Table 1.3.
AACSB: Analytic Blooms: Remember
Difficulty: Basic
Topic: Financial Institutions
1-45
Copyright ? 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
