MEDSTUDY.COM
TEST BANK
M
ED
ST
U
D
Y
Chapter One 1
Understanding Investments
,MEDSTUDY.COM
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
M
2. Gold coins would be classified as:
a. real assets.
ED
b. indirect assets.
c. personal assets.
d. financial assets.
Ans: a
Difficulty: Easy
ST
Ref: Establishing a Framework for Investors
3. Technically, investments include:
a. only financial assets.
U
b. only marketable assets.
c. financial and real assets that are marketable or non-marketable.
d. only financial and real assets that are marketable.
D
Ans: c
Difficulty: Easy
Y
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.
Chapter One 2
Understanding Investments
,MEDSTUDY.COM
Ans: c
Difficulty: Moderate
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
M
6. Another name for stockbrokers is:
a. specialists.
b. financial advisors.
ED
c. security analysts.
d. portfolio managers.
Ans: b
Difficulty: Moderate
ST
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.
U
b. security analysts.
c. investment bankers.
d. portfolio managers.
D
Ans: c
Difficulty: Moderate
Y
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 3
Understanding Investments
, MEDSTUDY.COM
9. Most financial advisors are registered with the Securities and Exchange
Commission as:
a. registered representatives.
b. registered investment advisors.
c. registered financial planners.
d. registered securities consultants.
Ans: b
Difficulty: Moderate
Ref: The Importance of Studying Investments
10. A Chartered Financial Analyst designation is a(n)
M
a. SEC-approved and awarded designation.
b. certification of a successful investing record.
c. professional designation awarded for meeting recognized standards of conduct
ED
and competency.
d. professional designation awarded by the brokerage industry.
Ans: c
Difficulty: Easy
ST
Ref: The Importance of Studying Investments
11. Underlying all investments is the tradeoff between:
a. expected return and actual return.
b. low risk and high risk.
U
c. actual return and high risk.
d. expected return and risk.
D
Ans: d
Difficulty: Moderate
Ref: Understanding the Investment Decision Process
Y
12. Which of the following investment areas relies heavily on mathematical and
statistical models?
a. Security analysis
b. Portfolio management
c. Institutional investing
d. Retirement planning
Ans: b
Difficulty: Moderate
Ref: Understanding the Investment Decision Process
Chapter One 4
Understanding Investments
TEST BANK
M
ED
ST
U
D
Y
Chapter One 1
Understanding Investments
,MEDSTUDY.COM
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
M
2. Gold coins would be classified as:
a. real assets.
ED
b. indirect assets.
c. personal assets.
d. financial assets.
Ans: a
Difficulty: Easy
ST
Ref: Establishing a Framework for Investors
3. Technically, investments include:
a. only financial assets.
U
b. only marketable assets.
c. financial and real assets that are marketable or non-marketable.
d. only financial and real assets that are marketable.
D
Ans: c
Difficulty: Easy
Y
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.
Chapter One 2
Understanding Investments
,MEDSTUDY.COM
Ans: c
Difficulty: Moderate
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
M
6. Another name for stockbrokers is:
a. specialists.
b. financial advisors.
ED
c. security analysts.
d. portfolio managers.
Ans: b
Difficulty: Moderate
ST
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.
U
b. security analysts.
c. investment bankers.
d. portfolio managers.
D
Ans: c
Difficulty: Moderate
Y
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 3
Understanding Investments
, MEDSTUDY.COM
9. Most financial advisors are registered with the Securities and Exchange
Commission as:
a. registered representatives.
b. registered investment advisors.
c. registered financial planners.
d. registered securities consultants.
Ans: b
Difficulty: Moderate
Ref: The Importance of Studying Investments
10. A Chartered Financial Analyst designation is a(n)
M
a. SEC-approved and awarded designation.
b. certification of a successful investing record.
c. professional designation awarded for meeting recognized standards of conduct
ED
and competency.
d. professional designation awarded by the brokerage industry.
Ans: c
Difficulty: Easy
ST
Ref: The Importance of Studying Investments
11. Underlying all investments is the tradeoff between:
a. expected return and actual return.
b. low risk and high risk.
U
c. actual return and high risk.
d. expected return and risk.
D
Ans: d
Difficulty: Moderate
Ref: Understanding the Investment Decision Process
Y
12. Which of the following investment areas relies heavily on mathematical and
statistical models?
a. Security analysis
b. Portfolio management
c. Institutional investing
d. Retirement planning
Ans: b
Difficulty: Moderate
Ref: Understanding the Investment Decision Process
Chapter One 4
Understanding Investments
