Chapter One

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

agency problem

The material wealth of a society is a function of...

all real assets

The means by which individuals hold their claims on real assets in a well-developed economy are...

financial assets

Asset allocation refers to...

the allocation of assets into broad asset classes

__________ are financial assets.

Bonds and stocks

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

Security selections refers to...

Choosing which securities to hold based on their valuation.

________ are real assets.

Land, machines, and knowledge

The value of a derivative security...

depends on the value of another related security

Financial assets...

indirectly contribute to the country's productive capacity