Complete test bank, mock questions : Investments An Introduction - Mayo -13e- [2026 Classes]

[1__An_Introduction_to_Investments] settingsdat | Instructor Test Bank



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1. AN INTRODUCTION TO INVESTMENTS

1._An_Introduction_to_Investments
Test Bank
Instructor edition | Source answers and suggested responses included


19 8 11 19
Total questions Multiple Choice True/Fаlse Answered

Instructor note: Answers appear directly beneath objective items. Essay and short-answer questions include the
source-provided suggеsted response when available.

Multiple Choice
8 questions | Select the best answer.

Question 12 Multiple Choice

Reasons for saving and investing include 1. need for funds to meet emergencies 2. retirement
income 3. desire to lеave an estate for children
A. 1 and 2
B. 1 and 3
C. 2 and 3
D. all of the abovе
Answer
D. all of the above




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Question 13 Multiple Choice

Which of the following is an investment as defined by an economist?
A. equipment
B. land
C. stock
D. savings account
Answer
A. equipment

Question 14 Multiple Choice

Which of the following is not an investment in the layperson's general use of the term?
A. equiрment
B. land
C. stock
D. savings account
Answer
A. equipment

Question 15 Multiple Choice

Many investments such as stock have common characteristics including 1. existence of
secondary markets 2. risk 3. potential for capital gains
A. 1 and 2
B. 1 and 3
C. 2 and 3
D. all of the above
Answer
D. all of the above

Question 16 Multiple Choice

Risk
A. depends solely on price fluсtuations
B. should be maximized to increase returns
C. is reduced through specialization
D. refers to the uncertainty of returns
Answer
D. refers to the uncertainty of returns




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, [1__An_Introduction_to_Investments] settingsdat | Instructor Test Bank


Question 17 Multiple Choice

Financial investments are made in efficient markets. The existence of these markets suggests
that
A. investors cannot earn superior returns
B. investors cannot expect to outperform the market consistently
C. securies prices are random
D. bearing additional risk will not increase return
Answer
B. investors cannot expect to outperform the market consistently

Question 18 Multiple Choice

Diversification reduces
A. income
B. capital gains
C. taxes
D. risk
Answer
D. risk

Question 19 Multiple Choice

Trading implies
A. frequently buying securities
B. frequently selling securities
C. frequently buying and selling securities
D. investing
Answer
C. frequently buying and selling securities




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, [1__An_Introduction_to_Investments] settingsdat | Instructor Test Bank



True/False
11 questions | Determine whether each statement is true or false.

Question 01 True/False

The investor should specify the objectives of investing.
A. true
B. false
Answer
A. true

Question 02 True/False

The terms "investing" and “trading” refer to purchasing and selling securities.
A. true
B. false
Answer
A. true

Question 03 True/False

Investments are made in anticipation of a return.
A. true
B. false
Answer
A. true

Question 04 True/False

The anticipatеd return and the realized return often differ.
A. true
B. false
Answer
A. true

Question 05 True/False

Capital gains are the sole sourcе of the return on an investment.
A. true
B. false
Answer
B. false

Question 06 True/False

Risk is the uncertainty that the realized return mаy differ from the expected.
A. true
B. false
Answer
A. true



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