1. Statement 1: Financial securities are instruments that can be transferred or sold easily through established financial markets. Statement 2: Financial securities uses physical certificates that sellers (holders) need to seek the approval and signature of the issuer to be transferred to the buyer. Statement 3: Financial securities are tradeable through established market or over-the counter. Statement 4: Financial securities hold monetary value or face value that is equivalent to their selling price. Statement 5: Financial securities are fungible that can be converted into assets or cash. a.All statements are true b.Statements 1, 2 and 3 are true c.Statements 2, 3 and 4 are true d.Statements 3, 4 and 5 are true e.Statements 1, 3 and 5 are true f. Statements 2, 4 and 5 are true

1. Statement 1: Financial securities are instruments that can be transferred or sold easily through
established financial markets.
Statement 2: Financial securities uses physical certificates that sellers (holders) need to seek the
approval and signature of the issuer to be transferred to the buyer.
Statement 3: Financial securities are tradeable through established market or over-the counter.
Statement 4: Financial securities hold monetary value or face value that is equivalent to their selling
price.
Statement 5: Financial securities are fungible that can be converted into assets or cash.
a.All statements are true b.Statements 1, 2 and 3 are true c.Statements 2, 3 and 4 are true
d.Statements 3, 4 and 5 are true e.Statements 1, 3 and 5 are true f. Statements 2, 4 and 5 are true

2. Statement 1: Debt securities represent ownership in a firm that would entitle the holders certain
dividends and claims in a firm.
Statement 2: Equity securities are loans made by the issuing firm that would entitle the holders
certain interest and maturity value.
Statement 3: Debt securities include bonds, certificates of deposits, promissory notes, government
notes and bills.
Statement 4: Equity securities include preferred and common stocks.
Statement 5: Derivative securities include instruments whose underlying assets are bonds, stocks,
commodities, currencies, interest rates and other assets.
a. All statements are true b.Statements 1, 2 and 3 are true c.Statements 2, 3 and 4 are true
d.Statements 3, 4 and 5 are true e.Statements 1, 3 and 5 are true f. Statements 2, 4 and 5 are true

3. Which is correct about financial securities?
a. Financial securities guarantees return to investors.
b. Financial securities eliminate risk that most financial managers are facing.
c. Diversification spreads risk and improves expected total return.
d. Financial securities protect investors against risk shocks brought by social, economic, and political
events.
e. All of the above
f. None of the above

4. Which is incorrect about financial securities?
a. Financial securities are guarantees the holders in terms of their claims.
b. Financial securities give stable financial return and safer environment to investors.
c. Financial securities are utilized by firms to generate capitalization for firms or the government.
d. Financial securities are regulated by the government to protect the investing public.
e. All of the above
f. None of the above

5. Which is correct about debt securities?
a. Debt securities make the holders owners and give them the right to vote in all matters of the firm.
b. Debt securities give the holders the right to receive interest and dividends.
c. Debt securities give the holders the right to be elected as board of directors or to vote them.
d. Debt securities give the holders the right to convert them into stocks if the indenture states.
e. All of the above
f. None of the above.

6. Which is not considered as a debt security issued by private entities?
a. Straight bonds
b. Floating-rate corporate notes

c. Commercial paper
d. Acceptance
e. All of the above
f. None of the above

7. Which is incorrect about public offering?
a. It is sold to limited to qualified investors.
b. It is sold to non-qualified and qualified investors.
c. It is sold to any interested investors.
d. It is sold to whether big or small investors.
e. All of the above
f. None of the above

8. Which is least likely true about bonds?
a. It is a financial security.
b. The issuer has the obligation to make specified payments.
c. Bondholders have the right to make decisions on the firm’s affairs.
d. Bondholders have the right to claim interest payments.
e. c & d
f. All of the above
g. None of the above

9. It refers to the legal contract for the bond.
a. Debenture
b. Indenture
c. Coupon
d. Bond certificate
e. All of the above
f. None of the above

10. Which is correct about covenants?
a. Covenants are written promises of the issuer that is enforceable by law.
b. Covenants are promises to do and not to do.
c. Covenants include interest and principal payments.
d. Covenants include a prohibition against disposing of collateral.
e. An employee receives minimal income at their early career stage but eventually he/she receives
f. All of the above
g. None of the above