Test Bank for Investments Analysis and Management, 15th Edition by Gerald R. Jensen| 9781394243754| All Chapters| UPDATED

Chapter One
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Understanding

,File: ch01: Understanding Investments
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Multiple Choice
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1. Which of the following is the best definition of wealth?
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a. The mk sum mk of mk all current and future income
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b. The mk total mk of mk all assets and all income
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c. The mk total mk of mk assets and income less any liabilities
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d. The mk sum mk of mk current income and the present value of future income
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Ans: d
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Difficulty: Moderate
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Ref: Establishing a Framework for Investors
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2. Gold coins would be classified as:
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a. real assets.
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b. indirect assets. mk


c. personal assets. mk


d. financial assets. mk




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




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: c
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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
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money each month are known as:
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a. 401(k) plans. mk


b. self-directed plans. mk


c. defined-benefit plans. mk


d. defined-contribution plans. mk




Chapter Onemk 2
Understanding

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


d. specialists.

Ans: c
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Difficulty: Moderate
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Ref: The Importance of Studying Investments
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6. Another name for stockbrokers is:
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a. specialists.
b. financial advisors.
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c. security analysts.
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d. portfolio managers.
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Ans: b
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Difficulty: Moderate
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Ref: The Importance of Studying Investments
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7. Investment professionals who take companies public, arrange mergers
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and acquisitions, and participate in municipal bond issues are:
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a. registered representatives.
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b. security analysts.
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c. investment bankers. mk


d. portfolio managers.
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Ans: c
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Difficulty: Moderate
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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.mk mk mk


c. large number of conversions into self-directed plans.
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d. increasing number of federal regulations that restrict pension fund
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portfolios.
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Ans: c
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Difficulty: Difficult
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Ref: The Importance of Studying Investments
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Chapter Onemk 3
Understanding

, 9. Most financial advisors are registered with the Securities and
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Exchange Commission as:
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a. registered mkrepresentatives.
b. registered mkinvestment advisors. mk


c. registered mkfinancial planners. mk


d. registered securities consultants.
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Ans: b mk


Difficulty: Moderate mk


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. mk mk mk


b. certification of a successful investing record.
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c. professional designation awarded for meeting recognized standards of
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conduct and competency.
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d. professional designation awarded by the brokerage industry.
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Ans: cmk


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.
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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. mk mk mk




Ans: d mk


Difficulty: Moderate mk


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


b. Portfolio management mk


c. Institutional investing mk


d. Retirement planning mk




Ans: b mk


Difficulty: Moderate mk


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