,TESTBANK for Foundations of Investments , 1st
Edition Troy Adair
Notes
1- The file is chapter after chapter.
2- We have shown you 10 pages.
3- The file contains all Appendix and Excel
sheet if it exists.
4- We have all what you need, we make
update at every time. There are many
new editions waiting you.
5- If you think you purchased the wrong file
You can contact us at every time, we can
replace it with true one.
Our email:
,Name: Class: Date:
Chapter 1. Introduction to Investments
1. Assets that either contribute to production or create income or wealth are
a. financial assets.
b. real assets.
c. diversified assets.
d. income assets.
ANSWER: b
2. A physical asset that has a value due to its substance and properties, such as precious metals,
commodities, real estate, land, equipment, and natural resources, is a
a. financial asset.
b. diversified asset.
c. capital gain.
d. real asset.
ANSWER: d
3. The copyright for a music composition is an example of a
a. financial asset.
b. diversified asset.
c. real asset.
d. capital gain.
ANSWER: c
4. A corporate stock is an example of a
a. financial asset.
b. diversified asset.
c. real asset.
d. capital gain.
ANSWER: a
5. A corporate bond is an example of a
a. diversified asset.
b. financial asset.
c. real asset.
d. capital gain.
ANSWER: b
6. Real assets are used to produce economic output, while what type of asset serves to allocate
how that output is divided up?
a. Diversified asset
b. Physical asset
c. Financial asset
d. Undiversified asset
ANSWER: c
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,Name: Class: Date:
Chapter 1. Introduction to Investments
7. GameStop has approximately 76,000,000 shares common stock outstanding as of May 2022.
Each share has the same value and rights as every other one. In this way, the asset is said to
a. lack volatility.
b. be stable in value.
c. be unique.
d. lack uniqueness.
ANSWER: d
8. Compared to financial assets, physical assets tend to be
a. less unique.
b. more unique.
c. more liquid.
d. higher in volume.
ANSWER: b
9. In the following diagram of a system of financial cash flows, from where does the initial
investment come?
a. Government
b. Projects
c. Investors
d. Companies
ANSWER: c
10. In the following diagram of a system of financial cash flows, profits reinvested in the
company are called
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,Name: Class: Date:
Chapter 1. Introduction to Investments
a. government.
b. retained earnings.
c. taxes.
d. projects.
ANSWER: b
11. In the following diagram of a system of financial cash flows, investment in projects comes
from
a. taxes.
b. investors.
c. companies.
d. government.
ANSWER: c
12. In the following diagram of a system of financial cash flows, taxes are paid by
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,Name: Class: Date:
Chapter 1. Introduction to Investments
a. taxes and investment.
b. profits and investors.
c. investors and companies.
d. companies and retained earnings.
ANSWER: b
13. In the following diagram of a system of financial cash flows, what is the government's
primary role?
a. Provide support
b. Pass regulation
c. Make investments
d. Collect taxes
ANSWER: d
14. In the following diagram of corporate finance decisions, which of these would be most
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,Name: Class: Date:
Chapter 1. Introduction to Investments
concerned with selecting the right firm in which to invest funds?
a. Investors
b. Companies
c. Government
d. Employees
ANSWER: a
15. In the following diagram of corporate finance decisions, all cash flows are subject to
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,Name: Class: Date:
Chapter 1. Introduction to Investments
a. uncertainty.
b. discretion.
c. oversight.
d. investment.
ANSWER: a
16. In the following diagram of corporate finance decisions, investors should consider all of these
questions EXCEPT which one?
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,Name: Class: Date:
Chapter 1. Introduction to Investments
a. In which firms and what types of financial instruments should investments be made?
b. Which projects are most profitable?
c. What terms and maturities of return cash flows should be pursued?
d. What is the best way to manage the timing and amounts of taxes paid?
ANSWER: b
17. When an investor chooses to buy a financial asset and submits a "buy" order, the price for the
asset is
a. locked in.
b. subject to change given market conditions.
c. guaranteed.
d. prone to discretion.
ANSWER: b
18. A complicating factor of the system of cash flows is
a. diversity of participants.
b. the large number of participants.
c. unionization of companies.
d. unsystematic risk.
ANSWER: b
19. Assets have value because they offer which type of benefits?
a. Intrinsic
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, Name: Class: Date:
Chapter 1. Introduction to Investments
b. Risk-adjusted
c. Extrinsic
d. Future
ANSWER: d
20. Asset valuation is based on two factors: the risks concerning the timing and amount of the
cash flows and the expected
a. pricing for an investment.
b. future cash flows for an investment.
c. speculation for an investment.
d. income for an investment.
ANSWER: b
21. Which of these is a quality of an investor who tends to take a risk only when adequately
compensated for it?
a. Systematically risky
b. Risk averse
c. Risk seeking
d. Speculative
ANSWER: b
22. Which of the following statements about time and risk is generally the case when the longer
the time horizon?
a. The less speculative an investor will be in investment choices.
b. The more diversified an investor will be in investment choices.
c. The less risky an investor will be in investment choices.
d. The more risky an investor will be in investment choices.
ANSWER: d
23. Regardless of what motivates the purchase of an investment, the buyer makes the purchase in
anticipation of
a. risk.
b. return.
c. capital gains.
d. rates of return.
ANSWER: b
24. The annualized return earned by the investment relative to its cost is called
a. speculation.
b. rate of return.
c. capital gain.
d. risk.
Copyright Cengage Learning. Powered by Cognero. Page 8
Edition Troy Adair
Notes
1- The file is chapter after chapter.
2- We have shown you 10 pages.
3- The file contains all Appendix and Excel
sheet if it exists.
4- We have all what you need, we make
update at every time. There are many
new editions waiting you.
5- If you think you purchased the wrong file
You can contact us at every time, we can
replace it with true one.
Our email:
,Name: Class: Date:
Chapter 1. Introduction to Investments
1. Assets that either contribute to production or create income or wealth are
a. financial assets.
b. real assets.
c. diversified assets.
d. income assets.
ANSWER: b
2. A physical asset that has a value due to its substance and properties, such as precious metals,
commodities, real estate, land, equipment, and natural resources, is a
a. financial asset.
b. diversified asset.
c. capital gain.
d. real asset.
ANSWER: d
3. The copyright for a music composition is an example of a
a. financial asset.
b. diversified asset.
c. real asset.
d. capital gain.
ANSWER: c
4. A corporate stock is an example of a
a. financial asset.
b. diversified asset.
c. real asset.
d. capital gain.
ANSWER: a
5. A corporate bond is an example of a
a. diversified asset.
b. financial asset.
c. real asset.
d. capital gain.
ANSWER: b
6. Real assets are used to produce economic output, while what type of asset serves to allocate
how that output is divided up?
a. Diversified asset
b. Physical asset
c. Financial asset
d. Undiversified asset
ANSWER: c
Copyright Cengage Learning. Powered by Cognero. Page 1
,Name: Class: Date:
Chapter 1. Introduction to Investments
7. GameStop has approximately 76,000,000 shares common stock outstanding as of May 2022.
Each share has the same value and rights as every other one. In this way, the asset is said to
a. lack volatility.
b. be stable in value.
c. be unique.
d. lack uniqueness.
ANSWER: d
8. Compared to financial assets, physical assets tend to be
a. less unique.
b. more unique.
c. more liquid.
d. higher in volume.
ANSWER: b
9. In the following diagram of a system of financial cash flows, from where does the initial
investment come?
a. Government
b. Projects
c. Investors
d. Companies
ANSWER: c
10. In the following diagram of a system of financial cash flows, profits reinvested in the
company are called
Copyright Cengage Learning. Powered by Cognero. Page 2
,Name: Class: Date:
Chapter 1. Introduction to Investments
a. government.
b. retained earnings.
c. taxes.
d. projects.
ANSWER: b
11. In the following diagram of a system of financial cash flows, investment in projects comes
from
a. taxes.
b. investors.
c. companies.
d. government.
ANSWER: c
12. In the following diagram of a system of financial cash flows, taxes are paid by
Copyright Cengage Learning. Powered by Cognero. Page 3
,Name: Class: Date:
Chapter 1. Introduction to Investments
a. taxes and investment.
b. profits and investors.
c. investors and companies.
d. companies and retained earnings.
ANSWER: b
13. In the following diagram of a system of financial cash flows, what is the government's
primary role?
a. Provide support
b. Pass regulation
c. Make investments
d. Collect taxes
ANSWER: d
14. In the following diagram of corporate finance decisions, which of these would be most
Copyright Cengage Learning. Powered by Cognero. Page 4
,Name: Class: Date:
Chapter 1. Introduction to Investments
concerned with selecting the right firm in which to invest funds?
a. Investors
b. Companies
c. Government
d. Employees
ANSWER: a
15. In the following diagram of corporate finance decisions, all cash flows are subject to
Copyright Cengage Learning. Powered by Cognero. Page 5
,Name: Class: Date:
Chapter 1. Introduction to Investments
a. uncertainty.
b. discretion.
c. oversight.
d. investment.
ANSWER: a
16. In the following diagram of corporate finance decisions, investors should consider all of these
questions EXCEPT which one?
Copyright Cengage Learning. Powered by Cognero. Page 6
,Name: Class: Date:
Chapter 1. Introduction to Investments
a. In which firms and what types of financial instruments should investments be made?
b. Which projects are most profitable?
c. What terms and maturities of return cash flows should be pursued?
d. What is the best way to manage the timing and amounts of taxes paid?
ANSWER: b
17. When an investor chooses to buy a financial asset and submits a "buy" order, the price for the
asset is
a. locked in.
b. subject to change given market conditions.
c. guaranteed.
d. prone to discretion.
ANSWER: b
18. A complicating factor of the system of cash flows is
a. diversity of participants.
b. the large number of participants.
c. unionization of companies.
d. unsystematic risk.
ANSWER: b
19. Assets have value because they offer which type of benefits?
a. Intrinsic
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, Name: Class: Date:
Chapter 1. Introduction to Investments
b. Risk-adjusted
c. Extrinsic
d. Future
ANSWER: d
20. Asset valuation is based on two factors: the risks concerning the timing and amount of the
cash flows and the expected
a. pricing for an investment.
b. future cash flows for an investment.
c. speculation for an investment.
d. income for an investment.
ANSWER: b
21. Which of these is a quality of an investor who tends to take a risk only when adequately
compensated for it?
a. Systematically risky
b. Risk averse
c. Risk seeking
d. Speculative
ANSWER: b
22. Which of the following statements about time and risk is generally the case when the longer
the time horizon?
a. The less speculative an investor will be in investment choices.
b. The more diversified an investor will be in investment choices.
c. The less risky an investor will be in investment choices.
d. The more risky an investor will be in investment choices.
ANSWER: d
23. Regardless of what motivates the purchase of an investment, the buyer makes the purchase in
anticipation of
a. risk.
b. return.
c. capital gains.
d. rates of return.
ANSWER: b
24. The annualized return earned by the investment relative to its cost is called
a. speculation.
b. rate of return.
c. capital gain.
d. risk.
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