Question

QUESTION 42

1. Corporate securities are ranked from highest to lowest risk as follows:

   		common stock; preferred stock; bonds
   		preferred stock; common stock; bonds
   		bonds; preferred stock; common stock
   		common stock; bonds; preferred stock

2 points   

QUESTION 43

1. _____ are loans made to borrowers who do not qualify for loans at the usual market rate because of a poor credit rating or because the loan is larger than justified by their income.

   		Fannie Mae Loans
   		Securitized mortgages
   		Mortgage-backed loans
   		Subprime loans

2 points   

QUESTION 44

1. ____ means that investors can convert their investments into cash quickly and at a low cost.

   		Diversification
   		Denominational intermediation
   		Liquidity intermediation
   		Cost advantages

2 points   

QUESTION 45

1. Companies that borrow funds from people who have saved and make loans to others are ____.

   		the FED
   		financial intermediaries
   		foreign exchange companies
   		central banks

2 points   

QUESTION 46

1. ____ is the uncertainty about the returns investors will earn on an investment account.

   		Moral hazzard
   		Wealth
   		Risk
   		Diversification

Answer 1

Answer 42:
common stock; preferred stock; bonds
Common stock carries high risk, preferred stock medium risk and bonds carry low risk

Answer 43:
Subprime loans

Answer 44:
Liquidity intermediation

Answer 45:
financial intermediaries

Answer 46
Risk