File: ch01: Understanding Investments
Multiple Choice
1. Which of the following is the best definition of wealth?
a. the sum of all current and future income
b. the total of all assets and all income
c. the total of assets and income less any liabilities.
d. the sum of current income and the present value of future income.
Ans: d
Difficulty: Moderate
Ref: Establishing a Framework for Investors
2. Gold coins would be classified as:
a. real assets
b. indirect assets
c. personal assets
d. financial assets
Ans: a
Difficulty: Easy
Ref: Establishing a Framework for Investors
3. Technically, investments include:
a. only financial assets.
b. only marketable assets.
c. financial and real assets that are marketable or non-marketable.
d. only financial and real assets that are marketable.
Ans: c
Difficulty: Easy
Ref: Establishing a Framework for Investors
4. The retirement plans that guarantee retirees a set amount of money each month
are known as:
a. 401(k) plans
b. self-directed plans
c. defined-benefit plans
d. defined-contribution plans
Ans: c
Difficulty: Moderate
Chapter One 1
Understanding Investments
, Ref: Establishing a Framework for Investors
5. The investment professionals that arrange the sale of new securities are
called:
a. arbitragers
b. traders
c. investment bankers
d. specialists
Ans: c
Difficulty: Moderate
Ref: The Importance of Studying Investments
6. Another name for stockbrokers is:
a. specialists
b. financial advisors
c. security analysts
d. portfolio managers
Ans: b
Difficulty: Moderate
Ref: The Importance of Studying Investments
7. Investment professionals who take companies public, arrange mergers and
acquisitions, and participate in municipal bond issues are :
a. registered representatives
b. security analysts
c. investment bankers
d. portfolio managers
Ans: c
Difficulty: Moderate
Ref: The Importance of Studying Investments
8. One reason for the declining importance of pension funds is the:
a. decrease in pension benefits for workers.
b. downsizing of U.S. companies
c. large number of conversions into self-directed plans.
d. increasing number of federal regulations that restrict pension fund portfolios.
Ans: c
Difficulty: Difficult
Ref: The Importance of Studying Investments
Chapter One 2
Understanding Investments
Multiple Choice
1. Which of the following is the best definition of wealth?
a. the sum of all current and future income
b. the total of all assets and all income
c. the total of assets and income less any liabilities.
d. the sum of current income and the present value of future income.
Ans: d
Difficulty: Moderate
Ref: Establishing a Framework for Investors
2. Gold coins would be classified as:
a. real assets
b. indirect assets
c. personal assets
d. financial assets
Ans: a
Difficulty: Easy
Ref: Establishing a Framework for Investors
3. Technically, investments include:
a. only financial assets.
b. only marketable assets.
c. financial and real assets that are marketable or non-marketable.
d. only financial and real assets that are marketable.
Ans: c
Difficulty: Easy
Ref: Establishing a Framework for Investors
4. The retirement plans that guarantee retirees a set amount of money each month
are known as:
a. 401(k) plans
b. self-directed plans
c. defined-benefit plans
d. defined-contribution plans
Ans: c
Difficulty: Moderate
Chapter One 1
Understanding Investments
, Ref: Establishing a Framework for Investors
5. The investment professionals that arrange the sale of new securities are
called:
a. arbitragers
b. traders
c. investment bankers
d. specialists
Ans: c
Difficulty: Moderate
Ref: The Importance of Studying Investments
6. Another name for stockbrokers is:
a. specialists
b. financial advisors
c. security analysts
d. portfolio managers
Ans: b
Difficulty: Moderate
Ref: The Importance of Studying Investments
7. Investment professionals who take companies public, arrange mergers and
acquisitions, and participate in municipal bond issues are :
a. registered representatives
b. security analysts
c. investment bankers
d. portfolio managers
Ans: c
Difficulty: Moderate
Ref: The Importance of Studying Investments
8. One reason for the declining importance of pension funds is the:
a. decrease in pension benefits for workers.
b. downsizing of U.S. companies
c. large number of conversions into self-directed plans.
d. increasing number of federal regulations that restrict pension fund portfolios.
Ans: c
Difficulty: Difficult
Ref: The Importance of Studying Investments
Chapter One 2
Understanding Investments
