Test Bank in Conjunction with Fundamentals of Investing,Gitman,11e

Fundamentals of Investing, 11e (Gitman/Joehnk/Smart)

Chapter 1 The Investment Environment



1.1 Learning Goal 1



1) Since 1900, the average annual return on savings accounts has been higher than the
return on stocks.

Answer: FALSE

Question Status: New Question

Learning Goal: Learning Goal 1



2) Land and buildings are examples of real property investments.

Answer: TRUE

Question Status: New Question

Learning Goal: Learning Goal 1



3) Almost half of Americans own stock or stock mutual funds.

Answer: TRUE

Question Status: Previous Edition

Learning Goal: Learning Goal 1



4) A Unites States Savings Bond is an example of an investment as defined in the text.

Answer: TRUE

Question Status: Previous Edition

Learning Goal: Learning Goal 1

,5) An example of a direct investment is the purchase of mutual fund shares.

Answer: FALSE

Question Status: Previous Edition

Learning Goal: Learning Goal 1



6) Which of the following is an investment as defined in the text.

A) Automobile insurance

B) A new automobile

C) A United States Saving Bond

D) All of the above

Answer: C

Question Status: Previous Edition

Learning Goal: Learning Goal 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

Question Status: Previous Edition

Learning Goal: Learning Goal 1

8) Which of the following is an indirect investment?

A) Stocks in foreign companies

B) U.S. savings bonds

C) Mutual funds

D) Real estate

Answer: C

Question Status: New Question

Learning Goal: Learning Goal 1



9) Debt represents funds loaned in exchange for

A) dividend income and the repayment of the loan principal.

B) dividend income and an ownership interest in the firm.

C) interest income and a partial ownership interest in the firm.

D) interest income and the repayment of the loan principal.

Answer: D

Question Status: Previous Edition

Learning Goal: Learning Goal 1

, 1.2 Learning Goal 2



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

Answer: FALSE

Question Status: New Question

Learning Goal: Learning Goal 2



2) Institutional investors are individuals who invest indirectly through financial
institutions.

Answer: FALSE

Question Status: New Question

Learning Goal: Learning Goal 2



3) Banks and insurance companies are examples of institutional investors.

Answer: TRUE

Question Status: New Question

Learning Goal: Learning Goal 2