TEST BANK FOR ESSENTIALS OF
INVESTMENTS 14TH EDITION BY BODIE
LATEST UPDATE 100% A+ 2026
PAGE 1
,Table of Contents
1. Part One: Elements of Investments
2. Investments: Background and Issues
3. Asset Classes and Financial Instruments
4. Securities Markets
5. Mutual Funds and Other Investment Companies Part Two: Portfolio Theory
6. Risk, Return, and the Historical Record
7. Efficient Diversification
8. Capital Asset Pricing and Arbitrage Pricing Theory
9. The Efficient Market Hypothesis
10. Behavioral Finance and Technical Analysis Part Three: Debt Securities
11. Bond Prices and Yields
12. Managing Bond Portfolios Part Four: Security Analysis
13. Macroeconomic and Industry Analysis
14. Equity Valuation
15. Financial Statement Analysis Part Five: Derivative Markets
16. Options Markets
17. Option Valuation
18. Futures Markets and Risk Management Part Six: Active Investment Management
19. Evaluating Investment Performance
20. International Diversification
21. Hedge Funds
22. Taxes, Inflation, and Investment Strategy
23. Investors and the Investment Process
PAGE 2
,This comprehensive structure provides a detailed overview of investment principles and practices, making it a valuable
resource for students and professionals in the field.
Chapter 1: Investments: Background and Issues Sample
MCQs
1. What is the primary goal of investing?
o A) To save money without any risk
o B) To allocate resources for generating income or profit
o C) To spend resources on consumption
o D) To minimize taxes
ANS: B
2. Which of the following best describes diversification?
o A) Investing all funds in a single asset
o B) Spreading investments across various assets to reduce risk
o C) Investing only in high-risk assets for higher returns
o D) Keeping all investments in cash equivalents
ANS: B
3. What is the fundamental trade-off in investing?
o A) Liquidity vs. Accessibility
o B) Risk vs. Return
o C) Time vs. Effort
o D) Diversification vs. Concentration
ANS: B
4. Which investment strategy involves allocating assets among different categories to balance risk and
reward?
PAGE 3
, o A) Speculation
o B) Market Timing
o C) Asset Allocation
o D) Arbitrage
ANS: C
5. Market volatility primarily affects which aspect of investing?
o A) Liquidity
o B) Diversification
o C) Risk
o D) Time Horizon
ANS: C
6. ESG investing stands for:
o A) Equity, Securities, and Governance
o B) Environmental, Social, and Governance
o C) Economic, Social, and Growth
o D) Equity, Sustainability, and Growth
ANS: B
7. A longer time horizon in investing generally allows for:
o A) Lower risk tolerance
o B) Higher liquidity needs
o C) Greater potential for higher returns
o D) Reduced diversification
ANS: C
8. Which technological advancement is transforming investment management by using algorithms to provide
automated financial advice?
o A) Blockchain
o B) Robo-advisors
o C) High-frequency trading
PAGE 4
INVESTMENTS 14TH EDITION BY BODIE
LATEST UPDATE 100% A+ 2026
PAGE 1
,Table of Contents
1. Part One: Elements of Investments
2. Investments: Background and Issues
3. Asset Classes and Financial Instruments
4. Securities Markets
5. Mutual Funds and Other Investment Companies Part Two: Portfolio Theory
6. Risk, Return, and the Historical Record
7. Efficient Diversification
8. Capital Asset Pricing and Arbitrage Pricing Theory
9. The Efficient Market Hypothesis
10. Behavioral Finance and Technical Analysis Part Three: Debt Securities
11. Bond Prices and Yields
12. Managing Bond Portfolios Part Four: Security Analysis
13. Macroeconomic and Industry Analysis
14. Equity Valuation
15. Financial Statement Analysis Part Five: Derivative Markets
16. Options Markets
17. Option Valuation
18. Futures Markets and Risk Management Part Six: Active Investment Management
19. Evaluating Investment Performance
20. International Diversification
21. Hedge Funds
22. Taxes, Inflation, and Investment Strategy
23. Investors and the Investment Process
PAGE 2
,This comprehensive structure provides a detailed overview of investment principles and practices, making it a valuable
resource for students and professionals in the field.
Chapter 1: Investments: Background and Issues Sample
MCQs
1. What is the primary goal of investing?
o A) To save money without any risk
o B) To allocate resources for generating income or profit
o C) To spend resources on consumption
o D) To minimize taxes
ANS: B
2. Which of the following best describes diversification?
o A) Investing all funds in a single asset
o B) Spreading investments across various assets to reduce risk
o C) Investing only in high-risk assets for higher returns
o D) Keeping all investments in cash equivalents
ANS: B
3. What is the fundamental trade-off in investing?
o A) Liquidity vs. Accessibility
o B) Risk vs. Return
o C) Time vs. Effort
o D) Diversification vs. Concentration
ANS: B
4. Which investment strategy involves allocating assets among different categories to balance risk and
reward?
PAGE 3
, o A) Speculation
o B) Market Timing
o C) Asset Allocation
o D) Arbitrage
ANS: C
5. Market volatility primarily affects which aspect of investing?
o A) Liquidity
o B) Diversification
o C) Risk
o D) Time Horizon
ANS: C
6. ESG investing stands for:
o A) Equity, Securities, and Governance
o B) Environmental, Social, and Governance
o C) Economic, Social, and Growth
o D) Equity, Sustainability, and Growth
ANS: B
7. A longer time horizon in investing generally allows for:
o A) Lower risk tolerance
o B) Higher liquidity needs
o C) Greater potential for higher returns
o D) Reduced diversification
ANS: C
8. Which technological advancement is transforming investment management by using algorithms to provide
automated financial advice?
o A) Blockchain
o B) Robo-advisors
o C) High-frequency trading
PAGE 4
