Chapter 1
UNDERSTANDING INVESTMENTS
Multiple Choice Questions
Establishing a Framework for Investors
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.
(d, moderate)
2. Stocks and bonds would be classified as:
a. real assets
b. indirect assets
c. personal assets
,d. financial assets
(d, easy)
3. Technically, investments include:
a. only financial assets.
b. only marketable assets.
c. financial and real assets that are marketable or non-marketable.
d. only financial and real assets that are marketable.
(c, easy)
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
(c, moderate)
The Importance of Studying Investments
, 5. The investment professionals that arrange the sale of new securities
are called:
a. arbitragers
b. traders
c. investment bankers
d. specialists
(c, moderate)
6. Another name for stockbrokers is:
a. specialists
b. registered representatives
c. security analysts
d. portfolio managers
(b, moderate)
7. Investment professionals whose jobs may depend on their
performance relative to the market are the:
a. registered representatives
b. security analysts
c. investment bankers
d. portfolio managers
, (d, moderate)
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.
(c, difficult)
9. Most financial advisors are registered with the Securities and
Exchange Commission as:
a. registered representatives.
b. registered investor advisors.
c. registered financial planners.
d. registered securities consultants.
UNDERSTANDING INVESTMENTS
Multiple Choice Questions
Establishing a Framework for Investors
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.
(d, moderate)
2. Stocks and bonds would be classified as:
a. real assets
b. indirect assets
c. personal assets
,d. financial assets
(d, easy)
3. Technically, investments include:
a. only financial assets.
b. only marketable assets.
c. financial and real assets that are marketable or non-marketable.
d. only financial and real assets that are marketable.
(c, easy)
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
(c, moderate)
The Importance of Studying Investments
, 5. The investment professionals that arrange the sale of new securities
are called:
a. arbitragers
b. traders
c. investment bankers
d. specialists
(c, moderate)
6. Another name for stockbrokers is:
a. specialists
b. registered representatives
c. security analysts
d. portfolio managers
(b, moderate)
7. Investment professionals whose jobs may depend on their
performance relative to the market are the:
a. registered representatives
b. security analysts
c. investment bankers
d. portfolio managers
, (d, moderate)
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.
(c, difficult)
9. Most financial advisors are registered with the Securities and
Exchange Commission as:
a. registered representatives.
b. registered investor advisors.
c. registered financial planners.
d. registered securities consultants.
