Test bank & Solution manual for Fundamentals of
V V V V V V V
Investing,14th Editionby Scott B. Smart
V V V V V V V
,Fundamentals of Investing, 14e (Smart/Zutter)
V V V V
Chapter 1 The Investment Environment
V V V V V
1.1 Learning Goal 1 V V
1) A non-interest bearing checking account is still considered an investment.
V V V V V V V V V
Answer: FALSE
V V
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
V V V V V V V V V V V V V
role in shaping investment choices
V V V V V
AACSB: Analytical thinking
V V
Question Status: Previous Edition
V V V V
Learning Goal: Learning Goal 1
V V V V V
2) Land and buildings are examples of real property investments.
V V V V V V V V
Answer: TRUE
V V
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
V V V V V V V V V V V V V
role in shaping investment choices
V V V V V
AACSB: Analytical thinking
V V
Question Status: Previous Edition
V V V V
Learning Goal: Learning Goal 1
V V V V V
3) Since 1900, the average return on stocks has exceeded the average return on savings
V V V V V V V V V V V V V
accounts by more than 6 percentage points.
V V V V V V V
Answer: TRUE V
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
V V V V V V V V V V V V V
role in shaping investment choices
V V V V V
AACSB: Analytical thinking
V V
Question Status: Previous Edition
V V V V
Learning Goal: Learning Goal 1
V V V V V
4) A United States Savings Bond is an example of an investment as defined in the text.
V V V V V V V V V V V V V V V
Answer: TRUE
V V
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
V V V V V V V V V V V V V
role in shaping investment choices
V V V V V
AACSB: Analytical thinking
V V
Question Status: Previous Edition
V V V V
Learning Goal: Learning Goal 1
V V V V V
5) Most sources of investment information are in print format, expensive, and difficult to
V V V V V V V V V V V V
access.
V
Answer: FALSE V
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
V V V V V V V V V V V V V
role in shaping investment choices
V V V V V
AACSB: Analytical thinking
V V
Question Status: Previous Edition
V V V V
Learning Goal: Learning Goal 1
V V V V V
1
Copyright © 2020 Pearson Education, Inc.
V V V V V
,6) Which of the following is NOT an investment as defined in the text?
V V V V V V V V V V V V
A) a certificate of deposit issued by a bank
V V V V V V V
B) a new automobile
V V
C) a United States Saving Bond
V V V V
D) a mutual fund held in a retirement account
V V V V V V V
Answer: B
V V
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
V V V V V V V V V V V V V
role in shaping investment choices
V V V V V
AACSB: Analytical thinking
V V
Question Status: Previous Edition
V V V V
Learning Goal: Learning Goal 1
V V V V V
7) Stocks are a(n) V investment representing
V V of a business. V V V V
A) direct; ownership V
B) direct; debt V
C) indirect; ownership V
D) indirect; debt V
Answer: A
V V
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
V V V V V V V V V V V V V
role in shaping investment choices
V V V V V
AACSB: Analytical thinking
V V
Question Status: Previous Edition
V V V V
Learning Goal: Learning Goal 1
V V V V V
8) An exchange traded fund that invests in the stocks of large corporations is an example of
V V V V V V V V V V V V V V V
A) direct investment.
V
B) indirect investment. V
C) derivative investment. V
D) tangible investment. V
Answer: B V
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
V V V V V V V V V V V V V
role in shaping investment choices
V V V V V
AACSB: Analytical thinking
V V
Question Status: Previous Edition
V V V V
Learning Goal: Learning Goal 1
V V V V V
9) Which of the following has declined in recent years?
V V V V V V V V
A) direct ownership of stock by individual investors
V V V V V V
B) the percentage of foreign stocks held in typical portfolios
V V V V V V V V
C) institutional ownership of common stocks V V V V
D) the timeliness of information available to investors
V V V V V V
Answer: A
V V
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
V V V V V V V V V V V V V
role in shaping investment choices
V V V V V
AACSB: Analytical thinking
V V
Question Status: Previous Edition
V V V V
Learning Goal: Learning Goal 1
V V V V V
2
Copyright © 2020 Pearson Education, Inc.
V V V V V
, 10) Which of the following has increased in recent years?
V V V V V V V V
A) direct ownership of stock by individual investors
V V V V V V
B) the percentage of domestic stocks held in typical portfolios
V V V V V V V V
C) institutional ownership of common stocks
V V V V
D) indirect ownership of stocks through mutual funds and ETFs.
V V V V V V V V
Answer: D
V V
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
V V V V V V V V V V V V V
role in shaping investment choices
V V V V V
AACSB: Analytical thinking
V V
Question Status: New Question
V V V V
Learning Goal: Learning Goal 1
V V V V V
11) Debt represents funds loaned in exchange for
V V V V V V
A) dividend income and the repayment of the loan principal.
V V V V V V V V
B) dividend income and an ownership interest in the firm.
V V V V V V V V
C) interest income and a partial ownership interest in the firm.
V V V V V V V V V
D) interest income and the repayment of the loan principal.
V V V V V V V V
Answer: D
V V
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
V V V V V V V V V V V V V
role in shaping investment choices
V V V V V
AACSB: Analytical thinking
V V
Question Status: Previous Edition
V V V V
Learning Goal: Learning Goal 1
V V V V V
1.2 Learning Goal 2 V V
1) Institutional investors manage money for businesses and nonprofit organizations, but not for
V V V V V V V V V V V
individuals.
V
Answer: FALSE V
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
V V V V V V V V V V V V V
managers
V
AACSB: Application of knowledge
V V V
Question Status: Previous Edition
V V V V
Learning Goal: Learning Goal 2
V V V V V
2) Institutional investors are individuals who invest indirectly through financial institutions.
V V V V V V V V V
Answer: FALSE
V V
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
V V V V V V V V V V V V V
managers
V
AACSB: Application of knowledge
V V V
Question Status: Previous Edition
V V V V
Learning Goal: Learning Goal 2
V V V V V
3
Copyright © 2020 Pearson Education, Inc.V V V V V
V V V V V V V
Investing,14th Editionby Scott B. Smart
V V V V V V V
,Fundamentals of Investing, 14e (Smart/Zutter)
V V V V
Chapter 1 The Investment Environment
V V V V V
1.1 Learning Goal 1 V V
1) A non-interest bearing checking account is still considered an investment.
V V V V V V V V V
Answer: FALSE
V V
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
V V V V V V V V V V V V V
role in shaping investment choices
V V V V V
AACSB: Analytical thinking
V V
Question Status: Previous Edition
V V V V
Learning Goal: Learning Goal 1
V V V V V
2) Land and buildings are examples of real property investments.
V V V V V V V V
Answer: TRUE
V V
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
V V V V V V V V V V V V V
role in shaping investment choices
V V V V V
AACSB: Analytical thinking
V V
Question Status: Previous Edition
V V V V
Learning Goal: Learning Goal 1
V V V V V
3) Since 1900, the average return on stocks has exceeded the average return on savings
V V V V V V V V V V V V V
accounts by more than 6 percentage points.
V V V V V V V
Answer: TRUE V
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
V V V V V V V V V V V V V
role in shaping investment choices
V V V V V
AACSB: Analytical thinking
V V
Question Status: Previous Edition
V V V V
Learning Goal: Learning Goal 1
V V V V V
4) A United States Savings Bond is an example of an investment as defined in the text.
V V V V V V V V V V V V V V V
Answer: TRUE
V V
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
V V V V V V V V V V V V V
role in shaping investment choices
V V V V V
AACSB: Analytical thinking
V V
Question Status: Previous Edition
V V V V
Learning Goal: Learning Goal 1
V V V V V
5) Most sources of investment information are in print format, expensive, and difficult to
V V V V V V V V V V V V
access.
V
Answer: FALSE V
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
V V V V V V V V V V V V V
role in shaping investment choices
V V V V V
AACSB: Analytical thinking
V V
Question Status: Previous Edition
V V V V
Learning Goal: Learning Goal 1
V V V V V
1
Copyright © 2020 Pearson Education, Inc.
V V V V V
,6) Which of the following is NOT an investment as defined in the text?
V V V V V V V V V V V V
A) a certificate of deposit issued by a bank
V V V V V V V
B) a new automobile
V V
C) a United States Saving Bond
V V V V
D) a mutual fund held in a retirement account
V V V V V V V
Answer: B
V V
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
V V V V V V V V V V V V V
role in shaping investment choices
V V V V V
AACSB: Analytical thinking
V V
Question Status: Previous Edition
V V V V
Learning Goal: Learning Goal 1
V V V V V
7) Stocks are a(n) V investment representing
V V of a business. V V V V
A) direct; ownership V
B) direct; debt V
C) indirect; ownership V
D) indirect; debt V
Answer: A
V V
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
V V V V V V V V V V V V V
role in shaping investment choices
V V V V V
AACSB: Analytical thinking
V V
Question Status: Previous Edition
V V V V
Learning Goal: Learning Goal 1
V V V V V
8) An exchange traded fund that invests in the stocks of large corporations is an example of
V V V V V V V V V V V V V V V
A) direct investment.
V
B) indirect investment. V
C) derivative investment. V
D) tangible investment. V
Answer: B V
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
V V V V V V V V V V V V V
role in shaping investment choices
V V V V V
AACSB: Analytical thinking
V V
Question Status: Previous Edition
V V V V
Learning Goal: Learning Goal 1
V V V V V
9) Which of the following has declined in recent years?
V V V V V V V V
A) direct ownership of stock by individual investors
V V V V V V
B) the percentage of foreign stocks held in typical portfolios
V V V V V V V V
C) institutional ownership of common stocks V V V V
D) the timeliness of information available to investors
V V V V V V
Answer: A
V V
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
V V V V V V V V V V V V V
role in shaping investment choices
V V V V V
AACSB: Analytical thinking
V V
Question Status: Previous Edition
V V V V
Learning Goal: Learning Goal 1
V V V V V
2
Copyright © 2020 Pearson Education, Inc.
V V V V V
, 10) Which of the following has increased in recent years?
V V V V V V V V
A) direct ownership of stock by individual investors
V V V V V V
B) the percentage of domestic stocks held in typical portfolios
V V V V V V V V
C) institutional ownership of common stocks
V V V V
D) indirect ownership of stocks through mutual funds and ETFs.
V V V V V V V V
Answer: D
V V
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
V V V V V V V V V V V V V
role in shaping investment choices
V V V V V
AACSB: Analytical thinking
V V
Question Status: New Question
V V V V
Learning Goal: Learning Goal 1
V V V V V
11) Debt represents funds loaned in exchange for
V V V V V V
A) dividend income and the repayment of the loan principal.
V V V V V V V V
B) dividend income and an ownership interest in the firm.
V V V V V V V V
C) interest income and a partial ownership interest in the firm.
V V V V V V V V V
D) interest income and the repayment of the loan principal.
V V V V V V V V
Answer: D
V V
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
V V V V V V V V V V V V V
role in shaping investment choices
V V V V V
AACSB: Analytical thinking
V V
Question Status: Previous Edition
V V V V
Learning Goal: Learning Goal 1
V V V V V
1.2 Learning Goal 2 V V
1) Institutional investors manage money for businesses and nonprofit organizations, but not for
V V V V V V V V V V V
individuals.
V
Answer: FALSE V
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
V V V V V V V V V V V V V
managers
V
AACSB: Application of knowledge
V V V
Question Status: Previous Edition
V V V V
Learning Goal: Learning Goal 2
V V V V V
2) Institutional investors are individuals who invest indirectly through financial institutions.
V V V V V V V V V
Answer: FALSE
V V
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
V V V V V V V V V V V V V
managers
V
AACSB: Application of knowledge
V V V
Question Status: Previous Edition
V V V V
Learning Goal: Learning Goal 2
V V V V V
3
Copyright © 2020 Pearson Education, Inc.V V V V V
