____________ is/ are a real asset(s).

• Only hand

• Only machines

• Only stocks and bonds

• Only knowledge

• Land, machines, and knowledge are real assets

Financial assets ______. 

• directly contribute to the country's productive capacity

• indirectly contribute to the country's productive capacity

• contribute to the country's productive capacity both directly and indirectly

• do not contribute to the country's productive capacity either directly or indirectly

• are of no value to anyone

A fixed-income security pays ____________. 

• a fixed level of income for the life of the owner

• a fixed stream of income or a stream of income that is determined according to a specified formula for the life of the security

• a variable level of income for owners on a fixed income

• a fixed or variable income stream at the option of the owner

• a riskless return that is fixed for life

Money market securities ____________. 

• are short term

• are highly marketable

• are generally very low risk

• are short term, highly marketable, and generally very low risk

• highly marketable and generally very low risk

An example of a derivative security is/are ______. 

• a common share of Microsoft

• an Intel bond

• a commodity futures contract and a call option on Intel stock

• a call option on Intel stock and an Intel bond

• a common share of Intel stock

Financial assets can permit all of the following except ____________

• consumption timing

• allocation of risk

• separation of ownership and control

• elimination of risk

• easy transfer of ownership

The ____________ refers to the potential conflict between management and shareholders. 

• agency problem

• diversification problem

• liquidity problem

• solvency problem

• regulatory problem

Which of the following are mechanisms that have evolved to mitigate potential agency problems?

• Compensation in the form of the firm's stock options

• Hiring bickering family members as corporate spies

• Underperforming management teams being forced out by boards of directors

• Security analysts monitoring the firm closely

• Takeover threats 

Theoretically, takeovers should result in ___________. 

• improved management

• increased stock price

• increased benefits to existing management of taken over firm

• improved management and increased stock price

• worse management and decreased stock price

Asset allocation refers to ____________

• choosing which securities to hold based on their valuation

• investing only in "safe" securities

• the allocation of assets into broad asset classes

• bottom-up analysis

• top-down analysis