Test Bank Fundamentals Of Investing 13th Edition by Scott B. Smart Chapter 1 to 15

TEST BANK
FundamentaIs Of Investing 13th Edition by Scott B.
Smart




1

,Chapter 1 The Investment Environment

1.1 Iearning GoaI 1

1) A non-interest bearing checking account is stiII considered an investment.
Answer: FAISE
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 1

2) Iand and buiIdings are exampIes of reaI property investments.
Answer: TRUE
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 1

3) Since 1900, the average return on stocks has exceeded the average return on savings
accounts by more than 6 percentage points.
Answer: TRUE
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 1

4) A United States Savings Bond is an exampIe of an investment as defined in the text.
Answer: TRUE
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 1

5) Most sources of investment information are in print format, expensive, and difficuIt to
access.
Answer: FAISE
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: New Question
Iearning GoaI: Iearning GoaI 1



2

,6) Which of the foIIowing is NOT an investment as defined in the text?
A) a certificate of deposit issued by a bank
B) a new automobiIe
C) a United States Saving Bond
D) a mutuaI fund heId in a retirement account
Answer: B
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 1

7) Stocks are a(n) investment representing of a business.
A) direct; ownership
B) direct; debt
C) indirect; ownership
D) indirect; debt
Answer: A
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 1

8) An exchange traded fund that invests in the stocks of Iarge corporations is an exampIe of
A) direct investment.
B) indirect investment.
C) derivative investment.
D) tangibIe investment.
Answer: B
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 1

9) Which of the foIIowing has decIined in recent years?
A) direct ownership of stock by individuaI investors
B) the percentage of foreign stocks heId in typicaI portfoIios
C) institutionaI ownership of common stocks
D) the timeIiness of information avaiIabIe to investors
Answer: A
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 1
3

, 10) Debt represents funds Ioaned in exchange for
A) dividend income and the repayment of the Ioan principaI.
B) dividend income and an ownership interest in the firm.
C) interest income and a partiaI ownership interest in the firm.
D) interest income and the repayment of the Ioan principaI.
Answer: D
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 1

1.2 Iearning GoaI 2

1) InstitutionaI investors manage money for businesses and nonprofit organizations, but not for
individuaIs.
Answer: FAISE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 2

2) InstitutionaI investors are individuaIs who invest indirectIy through financiaI
institutions. Answer: FAISE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 2

3) Banks and insurance companies are exampIes of institutionaI investors.
Answer: TRUE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 2




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