Test Bank - Anatomy and Physiology, 1st Edition (Elizabeth Co, 2025), Chapter 2-27 | All Chapters

Chapter One
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Understanding

,File: ch01: Understanding Investments
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Multiple Choice ff




1. Which of the following is the best definition of wealth?
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a. The sum of all current and future income
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b. The total of all assets and all income
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c. The total of assets and income less any liabilities
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d. The sum of current income and the present value of future income
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Ans: dff


Difficulty: Moderate ff


Ref: Establishing a Framework for Investors
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2. Gold coins would be classified as:
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a. real assets. ff


b. indirect assets. ff


c. personal assets. ff


d. financial assets. ff




Ans: aff


Difficulty:
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Easy
Ref: Establishing a Framework for Investors
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3. Technically, investments include: ff ff




a. only financial assets.
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b. only marketable assets.
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c. financial and real assets that are marketable or non-marketable.
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d. only financial and real assets that are marketable.
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Ans: cff


Difficulty:
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Easy
Ref: Establishing a Framework for Investors
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4. The retirement plans that guarantee retirees a set amount of money
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each month are known as:
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a. 401(k) plans. ff


b. self-directed plans. ff


c. defined-benefit plans. ff


d. defined-contribution plans. ff




Chapter One ff 2
Understanding

,Ans: cff


Difficulty: Moderate ff


Ref: Establishing a Framework for Investors
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5. The investment professionals that arrange the sale of new securities
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are called:
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a. arbitragers.
b. traders.
c. investment bankers. ff


d. specialists.

Ans: cff


Difficulty: Moderate ff


Ref: The Importance of Studying Investments
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6. Another name for stockbrokers is: ff ff ff ff




a. specialists.
b. financial advisors. ff


c. security analysts. ff


d. portfolio managers. ff




Ans: bff


Difficulty: Moderate ff


Ref: The Importance of Studying Investments
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7. Investment professionals who take companies public, arrange mergers and
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acquisitions, and participate in municipal bond issues are:
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a. registered representatives. ff


b. security analysts. ff


c. investment bankers. ff


d. portfolio managers. ff




Ans: cff


Difficulty: Moderate ff


Ref: The Importance of Studying Investments
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8. One reason for the declining importance of pension funds is the:
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a. decrease in pension benefits for workers.
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b. downsizing of U.S. companies. ff ff ff


c. large number of conversions into self-directed plans.
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d. increasing number of federal regulations that restrict pension fund portfolios.
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Ans: cff


Difficulty: Difficultff


Ref: The Importance of Studying Investments
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Chapter Oneff 3
Understanding

, 9. Most financial advisors are registered with the Securities and Exchange
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Commission as:
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a. registered representatives. ff


b. registered investment advisors. ff ff


c. registered financial planners. ff ff


d. registered securities consultants. ff ff




Ans: b ff


Difficulty: Moderate ff


Ref: The Importance of Studying Investments
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10. A Chartered Financial Analyst designation is a(n)
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a. SEC-approved and awarded designation. ff ff ff


b. certification of a successful investing record. ff ff ff ff ff


c. professional designation awarded for meeting recognized standards of conduct
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and competency.
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d. professional designation awarded by the brokerage industry.
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Ans: c ff


Difficulty:
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Easy
Ref: The Importance of Studying Investments
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11. Underlying all investments is the tradeoff between:
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a. expected return and actual return. ff ff ff ff


b. low risk and high risk.
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c. actual return and high risk.
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d. expected return and risk. ff ff ff




Ans: d ff


Difficulty: Moderate ff


Ref: Understanding the Investment Decision Process
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12. Which of the following investment areas relies heavily on mathematical
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and statistical models?
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a. Security analysis ff


b. Portfolio management ff


c. Institutional investing ff


d. Retirement planning ff




Ans: b ff


Difficulty: Moderate ff


Ref: Understanding the Investment Decision Process
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Chapter One ff 4
Understanding