,Test Bank For Investments 13th Edition
Chapter 1. An Introduction to Investments.
Chapter 1. An Introduction to Investments.
1. 01: The investor should specify the objectives of investing....
The investor should specify the objectives of investing.
*a. True
b. False
2. 02: The terms "investing" an
The terms "investing" and “trading” refer to purchasing and selling
securities.
*a. True
b. False
3. 03: Investments are made in anticipation of a return....
Investments are made in anticipation of a return.
*a. True
b. False
4. 04: The anticipated return and the realized return often differ.
The anticipated return and the realized return often differ.
*a. True
b. False
5. 05: Capital gains are the sole source of the return on an invest
Capital gains are the sole source of the return on an investment.
a. True
*b. False
6. 06: Risk is the uncertainty that the realized return may differ
Risk is the uncertainty that the realized return may differ from the
expected.
*a. True
b. False
7. 07: Stocks are initially sold in the “primary&
Stocks are initially sold in the “primary” market and subsequently
traded in the “secondary” market.
*a. True
b. False
1
,Test Bank For Investments 13th Edition
Chapter 1. An Introduction to Investments.
8. 08: Liquidity refers to the ease of selling a stock for a capita
Liquidity refers to the ease of selling a stock for a capital gain.
a. True
*b. False
9. 09: Efficient markets suggests that investors will outperform th
Efficient markets suggests that investors will outperform the market
consistently.
a. True
*b. False
10. 10: An informed investor can expect to consistently outperform t
An informed investor can expect to consistently outperform the market.
a. True
*b. False
11. 11: Portfolio assessment should include measures of both risk an
Portfolio assessment should include measures of both risk and return.
*a. True
b. False
12. 12: Reasons for saving and investing include1. need for funds to
Reasons for saving and investing include
1. need for funds to meet emergencies
2. retirement income
3. desire to leave an estate for children
a. 1 and 2
b. 1 and 3
c. 2 and 3
*d. all of the above
13. 13: Which of the following is an investment as defined by an eco
Which of the following is an investment as defined by an economist?
*a. equipment
b. land
c. stock
d. savings account
2
, Test Bank For Investments 13th Edition
Chapter 1. An Introduction to Investments.
14. 14: Which of the following is not an investment in the layperson
Which of the following is not an investment in the layperson's general use of the term?
*a. equipment
b. land
c. stock
d. savings account
15. 15: Many investments such as stock have common characteristics i
Many investments such as stock have common characteristics including
1. existence of secondary markets
2. risk
3. potential for capital gains
a. 1 and 2
b. 1 and 3
c. 2 and 3
*d. all of the above
16. 16: Risk...
Risk
a. depends solely on price fluctuations
b. should be maximized to increase returns
c. is reduced through specialization
*d. refers to the uncertainty of returns
17. 17: Financial investments are made in efficient markets. The exi
Financial investments are made in efficient markets. The existence of these markets suggests that
a. investors cannot earn superior returns
*b. investors cannot expect to outperform the market consistently
c. securies prices are random
d. bearing additional risk will not increase return
18. 18: Diversification reduces...
Diversification reduces
a. income
b. capital gains
c. taxes
*d. risk
3
Chapter 1. An Introduction to Investments.
Chapter 1. An Introduction to Investments.
1. 01: The investor should specify the objectives of investing....
The investor should specify the objectives of investing.
*a. True
b. False
2. 02: The terms "investing" an
The terms "investing" and “trading” refer to purchasing and selling
securities.
*a. True
b. False
3. 03: Investments are made in anticipation of a return....
Investments are made in anticipation of a return.
*a. True
b. False
4. 04: The anticipated return and the realized return often differ.
The anticipated return and the realized return often differ.
*a. True
b. False
5. 05: Capital gains are the sole source of the return on an invest
Capital gains are the sole source of the return on an investment.
a. True
*b. False
6. 06: Risk is the uncertainty that the realized return may differ
Risk is the uncertainty that the realized return may differ from the
expected.
*a. True
b. False
7. 07: Stocks are initially sold in the “primary&
Stocks are initially sold in the “primary” market and subsequently
traded in the “secondary” market.
*a. True
b. False
1
,Test Bank For Investments 13th Edition
Chapter 1. An Introduction to Investments.
8. 08: Liquidity refers to the ease of selling a stock for a capita
Liquidity refers to the ease of selling a stock for a capital gain.
a. True
*b. False
9. 09: Efficient markets suggests that investors will outperform th
Efficient markets suggests that investors will outperform the market
consistently.
a. True
*b. False
10. 10: An informed investor can expect to consistently outperform t
An informed investor can expect to consistently outperform the market.
a. True
*b. False
11. 11: Portfolio assessment should include measures of both risk an
Portfolio assessment should include measures of both risk and return.
*a. True
b. False
12. 12: Reasons for saving and investing include1. need for funds to
Reasons for saving and investing include
1. need for funds to meet emergencies
2. retirement income
3. desire to leave an estate for children
a. 1 and 2
b. 1 and 3
c. 2 and 3
*d. all of the above
13. 13: Which of the following is an investment as defined by an eco
Which of the following is an investment as defined by an economist?
*a. equipment
b. land
c. stock
d. savings account
2
, Test Bank For Investments 13th Edition
Chapter 1. An Introduction to Investments.
14. 14: Which of the following is not an investment in the layperson
Which of the following is not an investment in the layperson's general use of the term?
*a. equipment
b. land
c. stock
d. savings account
15. 15: Many investments such as stock have common characteristics i
Many investments such as stock have common characteristics including
1. existence of secondary markets
2. risk
3. potential for capital gains
a. 1 and 2
b. 1 and 3
c. 2 and 3
*d. all of the above
16. 16: Risk...
Risk
a. depends solely on price fluctuations
b. should be maximized to increase returns
c. is reduced through specialization
*d. refers to the uncertainty of returns
17. 17: Financial investments are made in efficient markets. The exi
Financial investments are made in efficient markets. The existence of these markets suggests that
a. investors cannot earn superior returns
*b. investors cannot expect to outperform the market consistently
c. securies prices are random
d. bearing additional risk will not increase return
18. 18: Diversification reduces...
Diversification reduces
a. income
b. capital gains
c. taxes
*d. risk
3
