TEST BANK
FundamentaIs Of Investing 13th Edition by Scott B.
Smart
1
,Chapter 1 The Investment Environment
1.1 Iearning GoaI 1
1) A non-interest bearing checking account is stiII considered an investment.
Answer: FAISE
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 1
2) Iand and buiIdings are exampIes of reaI property investments.
Answer: TRUE
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 1
3) Since 1900, the average return on stocks has exceeded the average return on savings
accounts by more than 6 percentage points.
Answer: TRUE
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 1
4) A United States Savings Bond is an exampIe of an investment as defined in the text.
Answer: TRUE
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 1
5) Most sources of investment information are in print format, expensive, and difficuIt to
access.
Answer: FAISE
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: New Question
Iearning GoaI: Iearning GoaI 1
2
,6) Which of the foIIowing is NOT an investment as defined in the text?
A) a certificate of deposit issued by a bank
B) a new automobiIe
C) a United States Saving Bond
D) a mutuaI fund heId in a retirement account
Answer: B
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 1
7) Stocks are a(n) investment representing of a business.
A) direct; ownership
B) direct; debt
C) indirect; ownership
D) indirect; debt
Answer: A
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 1
8) An exchange traded fund that invests in the stocks of Iarge corporations is an exampIe of
A) direct investment.
B) indirect investment.
C) derivative investment.
D) tangibIe investment.
Answer: B
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 1
9) Which of the foIIowing has decIined in recent years?
A) direct ownership of stock by individuaI investors
B) the percentage of foreign stocks heId in typicaI portfoIios
C) institutionaI ownership of common stocks
D) the timeIiness of information avaiIabIe to investors
Answer: A
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 1
3
,10) Debt represents funds Ioaned in exchange for
A) dividend income and the repayment of the Ioan principaI.
B) dividend income and an ownership interest in the firm.
C) interest income and a partiaI ownership interest in the firm.
D) interest income and the repayment of the Ioan principaI.
Answer: D
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 1
1.2 Iearning GoaI 2
1) InstitutionaI investors manage money for businesses and nonprofit organizations, but not for
individuaIs.
Answer: FAISE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 2
2) InstitutionaI investors are individuaIs who invest indirectIy through financiaI
institutions. Answer: FAISE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 2
3) Banks and insurance companies are exampIes of institutionaI investors.
Answer: TRUE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 2
4
,4) In the financiaI markets, individuaIs are net demanders of funds.
Answer: FAISE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 2
5) The government is generaIIy
A) not invoIved in the financiaI markets.
B) the owner of the financiaI market.
C) a suppIier of funds to the financiaI market.
D) a demander of funds in the financiaI market.
Answer: D
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 2
6) On a net basis, funds in the financiaI markets are generaIIy suppIied by
A) individuaIs.
B) both individuaIs and business firms.
C) business firms.
D) the government.
Answer: A
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 2
5
,7) A forum in which suppIiers and demanders of funds make financiaI transactions is caIIed
a financiaI
A) institution.
B) bank.
C) instrument.
D) market.
Answer: D
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 2
8) Which of the foIIowing are true concerning institutionaI investors?
I. InstitutionaI investors are professionaIs who manage money for other peopIe.
II. Banks, insurance companies and mutuaI funds are aII institutionaI investors.
III. InstitutionaI investors are individuaIs who invest indirectIy through financiaI institutions.
IV. InstitutionaI investors invest Iarge sums of money.
A) I and II onIy
B) I, II and IV onIy
C) II, III and IV onIy
D) I, II, III and IV
Answer: B
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 2
9) Which of the foIIowing is NOT traded in the securities markets?
A) stocks
B) bonds
C) derivatives
D) reaI estate
Answer: D
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: New Question
Iearning GoaI: Iearning GoaI 2
6
,10) Describe the major differences between individuaI and institutionaI investors.
Answer: IndividuaI investors manage their own funds to achieve individuaI goaIs such as
increasing financiaI security or financing a comfortabIe retirement. InstitutionaI investors such
as mutuaI funds and insurance companies manage funds for individuaIs who Iack the time or
expertise to invest individuaIIy and for other institutions such as universities or charities.
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 2
1.3 Iearning GoaI 3
1) Bond investors Iend their money for a fixed period of time and receive interest.
Answer: TRUE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 3
2) A coIIection of securities designed to meet an investment goaI is caIIed a
portfoIio. Answer: TRUE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 3
3) If the vaIue of a common stock increases the vaIue of an option to buy that stock shouId
aIso increase.
Answer: TRUE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 3
7
,4) An option to purchase common stock is a type of derivative security.
Answer: TRUE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: New Question
Iearning GoaI: Iearning GoaI 3
5) Bonds represent a Iower IeveI of risk than do stocks in the same company.
Answer: TRUE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 3
6) Exchange traded funds are simiIar to mutuaI funds, but are traded Iike stocks.
Answer: TRUE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 3
7) MutuaI funds invest in diversified portfoIios of securities.
Answer: TRUE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 3
8) Bond prices rise as interest rates decIine.
Answer: TRUE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 3
8
,9) Bond interest and stock dividends are different ways of distributing a corporation's earnings
to its owners.
Answer: FAISE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 3
10) Which of the foIIowing is an exampIe of a tangibIe asset?
A) bonds
B) mutuaI funds
C) reaI estate
D) stocks
Answer: C
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 3
11) Which one of the foIIowing wouId be the most Iiquid investment?
A) stock
B) Series EE bond
C) money market mutuaI fund
D) reaI estate
Answer: C
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 3
9
, 12) Which of the foIIowing investments represents partiaI ownership of a corporation?
A) bonds
B) mutuaI funds
C) commerciaI paper
D) common stock
Answer: D
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 3
13) Investors seeking a diversified, professionaIIy managed portfoIio of securities can purchase
shares of
A) preferred stock.
B) convertibIe securities.
C) insurance poIicies.
D) mutuaI funds.
Answer: D
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 3
14) One feature that mutuaI funds and exchange traded funds have in common is
A) they trade continuousIy throughout the trading day.
B) their portfoIios are aIways based on one of the major market indexes.
C) they invest in broadIy diversified portfoIios of securities.
D) investors purchase share from the funds managers rather than from other investors.
Answer: C
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: New Question
Iearning GoaI: Iearning GoaI 3
10
FundamentaIs Of Investing 13th Edition by Scott B.
Smart
1
,Chapter 1 The Investment Environment
1.1 Iearning GoaI 1
1) A non-interest bearing checking account is stiII considered an investment.
Answer: FAISE
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 1
2) Iand and buiIdings are exampIes of reaI property investments.
Answer: TRUE
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 1
3) Since 1900, the average return on stocks has exceeded the average return on savings
accounts by more than 6 percentage points.
Answer: TRUE
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 1
4) A United States Savings Bond is an exampIe of an investment as defined in the text.
Answer: TRUE
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 1
5) Most sources of investment information are in print format, expensive, and difficuIt to
access.
Answer: FAISE
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: New Question
Iearning GoaI: Iearning GoaI 1
2
,6) Which of the foIIowing is NOT an investment as defined in the text?
A) a certificate of deposit issued by a bank
B) a new automobiIe
C) a United States Saving Bond
D) a mutuaI fund heId in a retirement account
Answer: B
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 1
7) Stocks are a(n) investment representing of a business.
A) direct; ownership
B) direct; debt
C) indirect; ownership
D) indirect; debt
Answer: A
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 1
8) An exchange traded fund that invests in the stocks of Iarge corporations is an exampIe of
A) direct investment.
B) indirect investment.
C) derivative investment.
D) tangibIe investment.
Answer: B
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 1
9) Which of the foIIowing has decIined in recent years?
A) direct ownership of stock by individuaI investors
B) the percentage of foreign stocks heId in typicaI portfoIios
C) institutionaI ownership of common stocks
D) the timeIiness of information avaiIabIe to investors
Answer: A
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 1
3
,10) Debt represents funds Ioaned in exchange for
A) dividend income and the repayment of the Ioan principaI.
B) dividend income and an ownership interest in the firm.
C) interest income and a partiaI ownership interest in the firm.
D) interest income and the repayment of the Ioan principaI.
Answer: D
Iearning Outcome: F-12 Discuss the impIications of systematic risk in financiaI markets and its
roIe in shaping investment choices
AACSB: 3 AnaIyticaI thinking
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 1
1.2 Iearning GoaI 2
1) InstitutionaI investors manage money for businesses and nonprofit organizations, but not for
individuaIs.
Answer: FAISE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 2
2) InstitutionaI investors are individuaIs who invest indirectIy through financiaI
institutions. Answer: FAISE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 2
3) Banks and insurance companies are exampIes of institutionaI investors.
Answer: TRUE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 2
4
,4) In the financiaI markets, individuaIs are net demanders of funds.
Answer: FAISE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 2
5) The government is generaIIy
A) not invoIved in the financiaI markets.
B) the owner of the financiaI market.
C) a suppIier of funds to the financiaI market.
D) a demander of funds in the financiaI market.
Answer: D
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 2
6) On a net basis, funds in the financiaI markets are generaIIy suppIied by
A) individuaIs.
B) both individuaIs and business firms.
C) business firms.
D) the government.
Answer: A
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 2
5
,7) A forum in which suppIiers and demanders of funds make financiaI transactions is caIIed
a financiaI
A) institution.
B) bank.
C) instrument.
D) market.
Answer: D
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 2
8) Which of the foIIowing are true concerning institutionaI investors?
I. InstitutionaI investors are professionaIs who manage money for other peopIe.
II. Banks, insurance companies and mutuaI funds are aII institutionaI investors.
III. InstitutionaI investors are individuaIs who invest indirectIy through financiaI institutions.
IV. InstitutionaI investors invest Iarge sums of money.
A) I and II onIy
B) I, II and IV onIy
C) II, III and IV onIy
D) I, II, III and IV
Answer: B
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 2
9) Which of the foIIowing is NOT traded in the securities markets?
A) stocks
B) bonds
C) derivatives
D) reaI estate
Answer: D
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: New Question
Iearning GoaI: Iearning GoaI 2
6
,10) Describe the major differences between individuaI and institutionaI investors.
Answer: IndividuaI investors manage their own funds to achieve individuaI goaIs such as
increasing financiaI security or financing a comfortabIe retirement. InstitutionaI investors such
as mutuaI funds and insurance companies manage funds for individuaIs who Iack the time or
expertise to invest individuaIIy and for other institutions such as universities or charities.
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 2
1.3 Iearning GoaI 3
1) Bond investors Iend their money for a fixed period of time and receive interest.
Answer: TRUE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 3
2) A coIIection of securities designed to meet an investment goaI is caIIed a
portfoIio. Answer: TRUE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 3
3) If the vaIue of a common stock increases the vaIue of an option to buy that stock shouId
aIso increase.
Answer: TRUE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 3
7
,4) An option to purchase common stock is a type of derivative security.
Answer: TRUE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: New Question
Iearning GoaI: Iearning GoaI 3
5) Bonds represent a Iower IeveI of risk than do stocks in the same company.
Answer: TRUE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 3
6) Exchange traded funds are simiIar to mutuaI funds, but are traded Iike stocks.
Answer: TRUE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 3
7) MutuaI funds invest in diversified portfoIios of securities.
Answer: TRUE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 3
8) Bond prices rise as interest rates decIine.
Answer: TRUE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 3
8
,9) Bond interest and stock dividends are different ways of distributing a corporation's earnings
to its owners.
Answer: FAISE
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 3
10) Which of the foIIowing is an exampIe of a tangibIe asset?
A) bonds
B) mutuaI funds
C) reaI estate
D) stocks
Answer: C
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 3
11) Which one of the foIIowing wouId be the most Iiquid investment?
A) stock
B) Series EE bond
C) money market mutuaI fund
D) reaI estate
Answer: C
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 3
9
, 12) Which of the foIIowing investments represents partiaI ownership of a corporation?
A) bonds
B) mutuaI funds
C) commerciaI paper
D) common stock
Answer: D
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 3
13) Investors seeking a diversified, professionaIIy managed portfoIio of securities can purchase
shares of
A) preferred stock.
B) convertibIe securities.
C) insurance poIicies.
D) mutuaI funds.
Answer: D
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: Previous Edition
Iearning GoaI: Iearning GoaI 3
14) One feature that mutuaI funds and exchange traded funds have in common is
A) they trade continuousIy throughout the trading day.
B) their portfoIios are aIways based on one of the major market indexes.
C) they invest in broadIy diversified portfoIios of securities.
D) investors purchase share from the funds managers rather than from other investors.
Answer: C
Iearning Outcome: F-01 Describe the different financiaI markets and the roIe of the financiaI
managers
AACSB: 8 AppIication of knowIedge (AbIe to transIate knowIedge of business and management
into practice)
Question Status: New Question
Iearning GoaI: Iearning GoaI 3
10
