FINC 425 EXAM QUESTIONS AND ANSWERS

Real assets in the economy include all but which one of the following? Land Buildings Consumer Durables Common stock - Answer- Common stock The material wealth of society is determined by the economy's ________________, which is a function of the economy's ________________ - Answer- Productive capacity ; Real assets Which of the following are financial assets? I. Debt securities II. Equity securities III. Derivative securities - Answer- All of the above _____________________Represents an ownership share in a corporation. - Answer- Common stock Debt securities promise: I. A fixed stream of income II. A stream of income that is determined according to a specific formula III. A share in profits of the issuing entity. - Answer- I or II only Surf City Software Company develops new surf forecasting software. It sells the software to Microsoft in exchange for 1,000 shares of Microsoft common stock. Surf City Software has exchanged a ________ asset for a _________ asset in this transaction - Answer- real ; financial Stone Harbor Products takes out a bank loan. It receives $100,000 and signs a promissory note to pay back the loan over 5 years. - Answer- A new financial asset was created END OF HW 1 - Answer- EVERYTHING BEFORE THIS IS HW 1 Which of the following is not a money market instrument? - Answer- Preferred stock Money market securities are sometimes referred to as cash equivalents because - Answer- They are safe and marketable The most marketable money market security is - Answer- treasury bills Deposits of commercial banks at the Federal Reserve are called _____. - Answer-