Fundamentals of Investing, 12e (Smart/Gitman/Joehnk)
Chapter 1 The Investment Environment
1.1 Learning Goal 1
1) A non-interest bearing checking account is still considered an investment.
Answer: FALSE
Learning Outcome: F-03 Explain the process of valuing costs and benefits and show the
relationship between interest rates and the time value of money
AACSB: 6 Reflective Thinking Skills
Question Status: New Question
2) Land and buildings are examples of real property investments.
Answer: TRUE
Learning Outcome: F-01 Describe the different financial markets and the role of the
financial managers
AACSB: 6 Reflective Thinking Skills
Question Status: Previous Edition
3) The percentage of common stock owned directly by U.S. households has dramatically
increased since 1945.
Answer: FALSE
Learning Outcome: F-01 Describe the different financial markets and the role of the
financial managers
AACSB: 6 Reflective Thinking Skills
Question Status: New Question
,4) A United States Savings Bond is an example of an investment as defined in the text.
Answer: TRUE
Learning Outcome: F-01 Describe the different financial markets and the role of the
financial managers
AACSB: 6 Reflective Thinking Skills
Question Status: Previous Edition
5) Mutual funds are traded on exchanges and priced continuously throughout the trading
day.
Answer: FALSE
Learning Outcome: F-01 Describe the different financial markets and the role of the
financial managers
AACSB: 6 Reflective Thinking Skills
Question Status: New Question
,6) Which of the following is NOT an investment as defined in the text?
A) a certificate of deposit issued by a bank
B) a new automobile
C) a United States Saving Bond
D) a mutual fund held in a retirement account
Answer: B
Learning Outcome: F-01 Describe the different financial markets and the role of the
financial managers
AACSB: 6 Reflective Thinking Skills
Question Status: Revised
7) Stocks are a(n) ________ investment representing ________ of a business.
A) direct; ownership
B) direct; debt
C) indirect; ownership
D) indirect; debt
Answer: A
Learning Outcome: F-01 Describe the different financial markets and the role of the
financial managers
AACSB: 6 Reflective Thinking Skills
Question Status: Previous Edition
8) An exchange traded fund that invests in the stocks of large corporations is an example
of
A) direct investment.
B) indirect investment.
C) derivative investment.
, D) tangible investment.
Answer: B
Learning Outcome: F-01 Describe the different financial markets and the role of the
financial managers
AACSB: 6 Reflective Thinking Skills
Question Status: New Question
9) Typical hedge funds are characterized by
A) limited risk investment strategies.
B) low minimum investment requirements.
C) high minimum invested requirements.
D) their appeal to a large number of small investors.
Answer: A
Learning Outcome: F-01 Describe the different financial markets and the role of the
financial managers
AACSB: 6 Reflective Thinking Skills
Question Status: New Question
Chapter 1 The Investment Environment
1.1 Learning Goal 1
1) A non-interest bearing checking account is still considered an investment.
Answer: FALSE
Learning Outcome: F-03 Explain the process of valuing costs and benefits and show the
relationship between interest rates and the time value of money
AACSB: 6 Reflective Thinking Skills
Question Status: New Question
2) Land and buildings are examples of real property investments.
Answer: TRUE
Learning Outcome: F-01 Describe the different financial markets and the role of the
financial managers
AACSB: 6 Reflective Thinking Skills
Question Status: Previous Edition
3) The percentage of common stock owned directly by U.S. households has dramatically
increased since 1945.
Answer: FALSE
Learning Outcome: F-01 Describe the different financial markets and the role of the
financial managers
AACSB: 6 Reflective Thinking Skills
Question Status: New Question
,4) A United States Savings Bond is an example of an investment as defined in the text.
Answer: TRUE
Learning Outcome: F-01 Describe the different financial markets and the role of the
financial managers
AACSB: 6 Reflective Thinking Skills
Question Status: Previous Edition
5) Mutual funds are traded on exchanges and priced continuously throughout the trading
day.
Answer: FALSE
Learning Outcome: F-01 Describe the different financial markets and the role of the
financial managers
AACSB: 6 Reflective Thinking Skills
Question Status: New Question
,6) Which of the following is NOT an investment as defined in the text?
A) a certificate of deposit issued by a bank
B) a new automobile
C) a United States Saving Bond
D) a mutual fund held in a retirement account
Answer: B
Learning Outcome: F-01 Describe the different financial markets and the role of the
financial managers
AACSB: 6 Reflective Thinking Skills
Question Status: Revised
7) Stocks are a(n) ________ investment representing ________ of a business.
A) direct; ownership
B) direct; debt
C) indirect; ownership
D) indirect; debt
Answer: A
Learning Outcome: F-01 Describe the different financial markets and the role of the
financial managers
AACSB: 6 Reflective Thinking Skills
Question Status: Previous Edition
8) An exchange traded fund that invests in the stocks of large corporations is an example
of
A) direct investment.
B) indirect investment.
C) derivative investment.
, D) tangible investment.
Answer: B
Learning Outcome: F-01 Describe the different financial markets and the role of the
financial managers
AACSB: 6 Reflective Thinking Skills
Question Status: New Question
9) Typical hedge funds are characterized by
A) limited risk investment strategies.
B) low minimum investment requirements.
C) high minimum invested requirements.
D) their appeal to a large number of small investors.
Answer: A
Learning Outcome: F-01 Describe the different financial markets and the role of the
financial managers
AACSB: 6 Reflective Thinking Skills
Question Status: New Question
