Fundamentals of Investing – 13th Edition (Scott B. Smart & Lawrence J. Gitman) – Complete Test Bank

,FundamentalsoofoInvesting,o13eo(Smart)oChapte
ro1o TheoInvestmentoEnvironment

1.1 LearningoGoalo1

1) Aonon-
interestobearingocheckingoaccountoisostilloconsideredoanoinvestment.oAnswer:o
FALSE
LearningoOutcome:o F-
12oDiscussotheoimplicationsoofosystematicoriskoinofinancialomarketsoandoitsoroleoinoshapingoinvestme
ntochoices
AACSB:o 3oAnalyticalothinkingoQuestio
noStatus:o PreviousoEditionoLearningoGo
al:o LearningoGoalo1

2) Landoandobuildingsoareoexamplesooforealopropertyoinvestments.o
Answer:o TRUE
LearningoOutcome:o F-
12oDiscussotheoimplicationsoofosystematicoriskoinofinancialomarketsoandoitsoroleoinoshapingoinvestme
ntochoices
AACSB:o 3oAnalyticalothinkingoQuestio
noStatus:o PreviousoEditionoLearningoGo
al:o LearningoGoalo1

3) Sinceo1900,otheoaverageoreturnoonostocksohasoexceededotheoaverageoreturnoonosavingsoa
ccountsobyomoreothano6opercentageopoints.
Answer:o TRUE
LearningoOutcome:o F-
12oDiscussotheoimplicationsoofosystematicoriskoinofinancialomarketsoandoitsoroleoinoshapingoinvestme
ntochoices
AACSB:o 3oAnalyticalothinkingoQuestio
noStatus:o PreviousoEditionoLearningoGo
al:o LearningoGoalo1

4) AoUnitedoStatesoSavingsoBondoisoanoexampleoofoanoinvestmentoasodefinedoinotheotext.o
Answer:o TRUE
LearningoOutcome:o F-
12oDiscussotheoimplicationsoofosystematicoriskoinofinancialomarketsoandoitsoroleoinoshapingoinvestme
ntochoices
AACSB:o 3oAnalyticalothinkingoQuestio
noStatus:o PreviousoEditionoLearningoGo
al:o LearningoGoalo1

5) Mostosourcesoofoinvestmentoinformationoareoinoprintoformat,oexpensive,oandodifficultotooa
ccess.
Answer:o FALSE
LearningoOutcome:o F-
1
Copyrighto©o2017oPearsonoEducation,oInc.

,12oDiscussotheoimplicationsoofosystematicoriskoinofinancialomarketsoandoitsoroleoinoshapingoinvestm
entochoices
AACSB:o 3oAnalyticalothinkingo
QuestionoStatus:o NewoQuestiono
LearningoGoal:o LearningoGoalo1




2
Copyrighto©o2017oPearsonoEducation,oInc.

, 6) WhichoofotheofollowingoisoNOToanoinvestmentoasodefinedoinotheotext?
A) aocertificateoofodepositoissuedobyoaobank
B) aonewoautomobile
C) aoUnitedoStatesoSavingoBond
D) aomutualofundoheldoinoaoretirementoaccounto
Answer:o B
LearningoOutcome:o F-
12oDiscussotheoimplicationsoofosystematicoriskoinofinancialomarketsoandoitsoroleoinoshapingoinvestme
ntochoices
AACSB:o 3oAnalyticalothinkingoQuestio
noStatus:o PreviousoEditionoLearningoGo
al:o LearningoGoalo1

7) Stocksoareoa(n)o investmentorepresentingo ofoaobusiness.
A) direct;oownership
B) direct;odebt
C) indirect;oownership
D) indirect;odebt
oAnswer:o A

LearningoOutcome:o F-
12oDiscussotheoimplicationsoofosystematicoriskoinofinancialomarketsoandoitsoroleoinoshapingoinvestme
ntochoices
AACSB:o 3oAnalyticalothinkingoQuestio
noStatus:o PreviousoEditionoLearningoGo
al:o LearningoGoalo1

8) Anoexchangeotradedofundothatoinvestsoinotheostocksoofolargeocorporationsoisoanoexampleoof
A) directoinvestment.
B) indirectoinvestment.
C) derivativeoinvestment.
D) tangibleoinvestment.
Answer:o B
LearningoOutcome:o F-
12oDiscussotheoimplicationsoofosystematicoriskoinofinancialomarketsoandoitsoroleoinoshapingoinvestme
ntochoices
AACSB:o 3oAnalyticalothinkingoQuestio
noStatus:o PreviousoEditionoLearningoGo
al:o LearningoGoalo1

9) Whichoofotheofollowingohasodeclinedoinorecentoyears?
A) directoownershipoofostockobyoindividualoinvestors
B) theopercentageoofoforeignostocksoheldoinotypicaloportfolios
C) institutionaloownershipoofocommonostocks
D) theotimelinessoofoinformationoavailableotooinvestorso
Answer:o A
LearningoOutcome:o F-
12oDiscussotheoimplicationsoofosystematicoriskoinofinancialomarketsoandoitsoroleoinoshapingoinvestme
3
Copyrighto©o2017oPearsonoEducation,oInc.