Finance Exam

Asset allocation refers to the _________.a. allocation of the investment portfolio across broad asset classesb. analysis of the value of securitiesc. choice of specific assets within each asset classd. none of the answers define asset allocation a. allocation of the investment portfolio across broad asset classes
Which of the following are financial assets?I. Debt securitiesII. Equity securitiesIII. Derivative securitiesI onlyI and II onlyII and III onlyI, II and III I, II and III
_____ is an example of an agency problem.Managers engage in empire buildingManagers protect their jobs by avoiding risky projectsManagers over consume luxuries such as corporate jetsAll of the answers provide examples of agency problems All of the answers provide examples of agency problems
Financial markets allow for all but which one of the following?Shift consumption through time from higher income periods to lowerPrice securities according to their riskinessChannel funds from lenders of funds to borrowers of funds Allow most participants to routinely earn high returns with low risk Allow most participants to routinely earn high returns with low risk
_____ is a mechanism to mitigate potential agency problems.Tying income of managers to success of the firmDirectors defending top managementAnti takeover strategiesStraight voting method of electing the board of directors Tying income of managers to success of the firm

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