Question

1. The Sarbanes-Oxley Act
A) requires corporations to have more independent directors.
B) requires corporations to have more independent directors and requires the firm's
CFO to personally vouch for the firm's accounting statements.
C) prohibits auditing firms from providing other services to clients.
D) requires the firm's CFO to personally vouch for the firm's accounting statements.
E) All of the options

2. Which of the following portfolio construction methods starts with security analysis?
A) Middle-out
B) Top-down
C) Bottom-up
D) Buy and hold
E) Asset allocation

3. Which of the following portfolio construction methods starts with asset allocation?
A) Top-down
B) Asset allocation
C) Bottom-up
D) Buy and hold
E) Middle-out

4. ________ are examples of financial intermediaries.
A) Investment companies
B) Credit unions
C) Commercial banks
D) Insurance companies
E) All of the options

Answer 1

1. E

The Sarbanes-Oxley Act requires corporations to have more independent directors, requires the firm's CFO to personally vouch for the firm's accounting statements, and prohibits auditing firms from providing other services to clients.

Option E -- All of the Above

2. C

Bottom-up refers to using security analysis to find securities that are attractively priced.

3. A

Top-down refers to using asset allocation as a starting point. It can help investors to determine an ideal asset allocation for a portfolio in any type of market environment.

4. E

A financial intermediary offers a service to help an individual/ firm to save or borrow money. A financial intermediary helps to facilitate the different needs of lenders and borrowers.

Investment companies, credit unions, commercial banks, insurance companies are all examples of Financial intermediaries.