Test Bank & Solution Manual for Fundamentals of investing, 14th Edition by Scott B. Smart, All Chapters ||Complete A+ Guide

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Test bank & Solution manual for Fundamentalsof
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Investing,14thEditionby Scott B. Smart
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Fundamentals of Investing, 14e (Smart/Zutter)
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Chapter 1 The Investment Environment
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1.1 Learning Goal 1 b b




1) A non-interest bearing checking account is still considered an investment.
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Answer: FALSE
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Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
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role in shaping investment choices
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AACSB: Analytical thinking
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Question Status: Previous Edition
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Learning Goal: Learning Goal 1
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2) Land and buildings are examples of real property investments.
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Answer: TRUE
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Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
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role in shaping investment choices
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AACSB: Analytical thinking
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Question Status: Previous Edition
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Learning Goal: Learning Goal 1
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3) Since 1900, the average return on stocks has exceeded the average return on savings
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accounts by more than 6 percentage points.
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Answer: TRUE b


Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
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role in shaping investment choices
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AACSB: Analytical thinking
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Question Status: Previous Edition
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Learning Goal: Learning Goal 1
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4) A United States Savings Bond is an example of an investment as defined in the text.
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Answer: TRUE
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Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
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role in shaping investment choices
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AACSB: Analytical thinking
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Question Status: Previous Edition
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Learning Goal: Learning Goal 1
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5) Most sources of investment information are in print format, expensive, and difficult to
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access.
b


Answer: FALSE b


Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
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role in shaping investment choices
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AACSB: Analytical thinking
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Question Status: Previous Edition
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Learning Goal: Learning Goal 1
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1
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6) Which of the following is NOT an investment as defined in the text?
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A) a certificate of deposit issued by a bank
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B) a new automobile
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C) a United States Saving Bond
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D) a mutual fund held in a retirement account
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Answer: B
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Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
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role in shaping investment choices
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AACSB: Analytical thinking
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Question Status: Previous Edition
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Learning Goal: Learning Goal 1
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7) Stocks are a(n) b investment representing
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A) direct; ownership b


B) direct; debt b


C) indirect; ownership b


D) indirect; debt b


Answer: A
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Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
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role in shaping investment choices
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AACSB: Analytical thinking
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Question Status: Previous Edition
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Learning Goal: Learning Goal 1
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8) An exchange traded fund that invests in the stocks of large corporations is an example of
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A) direct investment.
b


B) indirect investment. b


C) derivative investment. b


D) tangible investment. b


Answer: B b


Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
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role in shaping investment choices
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AACSB: Analytical thinking
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Question Status: Previous Edition
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Learning Goal: Learning Goal 1
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9) Which of the following has declined in recent years?
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A) direct ownership of stock by individual investors
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B) the percentage of foreign stocks held in typical portfolios
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C) institutional ownership of common stocks b b b b


D) the timeliness of information available to investors
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Answer: A
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Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
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role in shaping investment choices
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AACSB: Analytical thinking
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Question Status: Previous Edition
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Learning Goal: Learning Goal 1
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2
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10) Which of the following has increased in recent years?
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A) direct ownership of stock by individual investors
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B) the percentage of domestic stocks held in typical portfolios
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C) institutional ownership of common stocks
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D) indirect ownership of stocks through mutual funds and ETFs.
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Answer: D
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Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
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role in shaping investment choices
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AACSB: Analytical thinking
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Question Status: New Question
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Learning Goal: Learning Goal 1
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11) Debt represents funds loaned in exchange for
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A) dividend income and the repayment of the loan principal.
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B) dividend income and an ownership interest in the firm.
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C) interest income and a partial ownership interest in the firm.
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D) interest income and the repayment of the loan principal.
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Answer: D
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Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
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role in shaping investment choices
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AACSB: Analytical thinking
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Question Status: Previous Edition
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Learning Goal: Learning Goal 1
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1.2 Learning Goal 2 b b




1) Institutional investors manage money for businesses and nonprofit organizations, but not for
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individuals.
b


Answer: FALSE b


Learning Outcome: F-01 Describe the different financial markets and the role of the financial
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managers
b


AACSB: Application of knowledge
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Question Status: Previous Edition
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Learning Goal: Learning Goal 2
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2) Institutional investors are individuals who invest indirectly through financial institutions.
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Answer: FALSE
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Learning Outcome: F-01 Describe the different financial markets and the role of the financial
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managers
b


AACSB: Application of knowledge
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Question Status: Previous Edition
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Learning Goal: Learning Goal 2
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3
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