2. Which of the following is NOT true regarding mortgaged-backed securities (MBS)?
a. Securitization provides liquidity to the mortgage market and makes it possible for banks to
loan more money to home buyers.
b. MBS are sold to investors who can hold them as an investment or resell them to other
c. The MBS process allows the mortgage bank or other financial institution that made the
original mortgage loan to get its money back out of the loan and lend it to someone else.
d. All of the above are true regarding mortgaged-backed securities.
11. Which of the following represents an attempt to measure the net results of the firm’s
operations (revenues versus expenses) over a given time period?
a. statement of cash flows
b. sources and uses of funds statement
c. balance sheet
d. income statement
13. An income statement may be represented as follows:
a. Sales - Expenses = Retained Earnings
b. Sales - Expenses = Profits
c. Revenues - Liabilities = Net Income
d. Sales - Liabilities = Profits
14. Which of the following ratios would be the poorest indicator of how rapidly the firm’s credit
accounts are being collected?
a. average collection period
b. cash conversion cycle
c. times interest earned
d. accounts receivable turnover ratio
16. Jeter Industries has an accounts receivable turnover ratio of 4.5. If Jeter has an accounts
receivable balance of $100,000, what is Jeter’s average daily credit sales?