,Fundamentals of Investing, 13e (Smart)
Chapter 1 The Investment Environment
1.1 Learning Goal 1
1) A non-interest bearing checking account is still considered an investment.
Answer: FALSE
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
role in shaping investment choices
AACSB: 3 Analytical thinking
Question Status: Previous Edition
Learning Goal: Learning Goal 1
2) Land and buildings are examples of real property investments.
Answer: TRUE
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
role in shaping investment choices
AACSB: 3 Analytical thinking
Question Status: Previous Edition
Learning Goal: Learning Goal 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
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
role in shaping investment choices
AACSB: 3 Analytical thinking
Question Status: Previous Edition
Learning Goal: Learning Goal 1
4) A United States Savings Bond is an example of an investment as defined in the text.
Answer: TRUE
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
role in shaping investment choices
AACSB: 3 Analytical thinking
Question Status: Previous Edition
Learning Goal: Learning Goal 1
5) Most sources of investment information are in print format, expensive, and difficult to
access.
Answer: FALSE
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
role in shaping investment choices
AACSB: 3 Analytical thinking
Question Status: New Question
Learning Goal: Learning Goal 1
1
,6) Which $tgof $tgthe $tgfollowing $tgis $tgNOT $tgan $tginvestment $tgas $tgdefined $tgin $tgthe $tgtext?
A) a $tgcertificate $tgof $tgdeposit $tgissued $tgby $tga $tgbank
B) a $tgnew $tgautomobile
C) a $tgUnited $tgStates $tgSaving $tgBond
D) a $tgmutual $tgfund $tgheld $tgin $tga $tgretirement
$tgaccount $tgAnswer: $ t g B
Learning $tgOutcome: $ t g F-12 $tgDiscuss $tgthe $tgimplications $tgof $tgsystematic $tgrisk $tgin $tgfinancial
$tgmarkets $tgand $tgits $tgrole $tgin $tgshaping $tginvestment $tgchoices
AACSB: $ t g 3 $tgAnalytical $tgthinking
$tgQuestion $tgStatus: $ t g Previous $tgEdition
$tgLearning $tgGoal: $ t g Learning $tgGoal $tg1
7) Stocks $tgare $tga(n) $tg investment $tgrepresenting $tg of $tga $tgbusiness.
A) direct; $tgownership
B) direct; $tgdebt
C) indirect; $tgownership
D) indirect;
$tgdebt $tgAnswer:
$ tg A
Learning $tgOutcome: $ t g F-12 $tgDiscuss $tgthe $tgimplications $tgof $tgsystematic $tgrisk $tgin $tgfinancial
$tgmarkets $tgand $tgits $tgrole $tgin $tgshaping $tginvestment $tgchoices
AACSB: $ t g 3 $tgAnalytical $tgthinking
$tgQuestion $tgStatus: $ t g Previous $tgEdition
$tgLearning $tgGoal: $ t g Learning $tgGoal $tg1
8) An $tgexchange $tgtraded $tgfund $tgthat $tginvests $tgin $tgthe $tgstocks $tgof $tglarge $tgcorporations $tgis $tgan
$tgexample $tgof
A) direct $tginvestment.
B) indirect $tginvestment.
C) derivative $tginvestment.
D) tangible
$tginvestment.
Answer: $ t g B
Learning $tgOutcome: $ t g F-12 $tgDiscuss $tgthe $tgimplications $tgof $tgsystematic $tgrisk $tgin $tgfinancial
$tgmarkets $tgand $tgits $tgrole $tgin $tgshaping $tginvestment $tgchoices
AACSB: $ t g 3 $tgAnalytical $tgthinking
$tgQuestion $tgStatus: $ t g Previous $tgEdition
$tgLearning $tgGoal: $ t g Learning $tgGoal $tg1
9) Which $tgof $tgthe $tgfollowing $tghas $tgdeclined $tgin $tgrecent $tgyears?
A) direct $tgownership $tgof $tgstock $tgby $tgindividual $tginvestors
B) the $tgpercentage $tgof $tgforeign $tgstocks $tgheld $tgin $tgtypical $tgportfolios
C) institutional $tgownership $tgof $tgcommon $tgstocks
D) the $tgtimeliness $tgof $tginformation $tgavailable $tgto
$tginvestors $tgAnswer: $ t g A
Learning $tgOutcome: $ t g F-12 $tgDiscuss $tgthe $tgimplications $tgof $tgsystematic $tgrisk $tgin $tgfinancial
$tgmarkets $tgand $tgits $tgrole $tgin $tgshaping $tginvestment $tgchoices
2
, AACSB: $ t g 3 $tgAnalytical $tgthinking
$tgQuestion $tgStatus: $ t g Previous $tgEdition
$tgLearning $tgGoal: $ t g Learning $tgGoal $tg1
3
Chapter 1 The Investment Environment
1.1 Learning Goal 1
1) A non-interest bearing checking account is still considered an investment.
Answer: FALSE
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
role in shaping investment choices
AACSB: 3 Analytical thinking
Question Status: Previous Edition
Learning Goal: Learning Goal 1
2) Land and buildings are examples of real property investments.
Answer: TRUE
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
role in shaping investment choices
AACSB: 3 Analytical thinking
Question Status: Previous Edition
Learning Goal: Learning Goal 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
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
role in shaping investment choices
AACSB: 3 Analytical thinking
Question Status: Previous Edition
Learning Goal: Learning Goal 1
4) A United States Savings Bond is an example of an investment as defined in the text.
Answer: TRUE
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
role in shaping investment choices
AACSB: 3 Analytical thinking
Question Status: Previous Edition
Learning Goal: Learning Goal 1
5) Most sources of investment information are in print format, expensive, and difficult to
access.
Answer: FALSE
Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its
role in shaping investment choices
AACSB: 3 Analytical thinking
Question Status: New Question
Learning Goal: Learning Goal 1
1
,6) Which $tgof $tgthe $tgfollowing $tgis $tgNOT $tgan $tginvestment $tgas $tgdefined $tgin $tgthe $tgtext?
A) a $tgcertificate $tgof $tgdeposit $tgissued $tgby $tga $tgbank
B) a $tgnew $tgautomobile
C) a $tgUnited $tgStates $tgSaving $tgBond
D) a $tgmutual $tgfund $tgheld $tgin $tga $tgretirement
$tgaccount $tgAnswer: $ t g B
Learning $tgOutcome: $ t g F-12 $tgDiscuss $tgthe $tgimplications $tgof $tgsystematic $tgrisk $tgin $tgfinancial
$tgmarkets $tgand $tgits $tgrole $tgin $tgshaping $tginvestment $tgchoices
AACSB: $ t g 3 $tgAnalytical $tgthinking
$tgQuestion $tgStatus: $ t g Previous $tgEdition
$tgLearning $tgGoal: $ t g Learning $tgGoal $tg1
7) Stocks $tgare $tga(n) $tg investment $tgrepresenting $tg of $tga $tgbusiness.
A) direct; $tgownership
B) direct; $tgdebt
C) indirect; $tgownership
D) indirect;
$tgdebt $tgAnswer:
$ tg A
Learning $tgOutcome: $ t g F-12 $tgDiscuss $tgthe $tgimplications $tgof $tgsystematic $tgrisk $tgin $tgfinancial
$tgmarkets $tgand $tgits $tgrole $tgin $tgshaping $tginvestment $tgchoices
AACSB: $ t g 3 $tgAnalytical $tgthinking
$tgQuestion $tgStatus: $ t g Previous $tgEdition
$tgLearning $tgGoal: $ t g Learning $tgGoal $tg1
8) An $tgexchange $tgtraded $tgfund $tgthat $tginvests $tgin $tgthe $tgstocks $tgof $tglarge $tgcorporations $tgis $tgan
$tgexample $tgof
A) direct $tginvestment.
B) indirect $tginvestment.
C) derivative $tginvestment.
D) tangible
$tginvestment.
Answer: $ t g B
Learning $tgOutcome: $ t g F-12 $tgDiscuss $tgthe $tgimplications $tgof $tgsystematic $tgrisk $tgin $tgfinancial
$tgmarkets $tgand $tgits $tgrole $tgin $tgshaping $tginvestment $tgchoices
AACSB: $ t g 3 $tgAnalytical $tgthinking
$tgQuestion $tgStatus: $ t g Previous $tgEdition
$tgLearning $tgGoal: $ t g Learning $tgGoal $tg1
9) Which $tgof $tgthe $tgfollowing $tghas $tgdeclined $tgin $tgrecent $tgyears?
A) direct $tgownership $tgof $tgstock $tgby $tgindividual $tginvestors
B) the $tgpercentage $tgof $tgforeign $tgstocks $tgheld $tgin $tgtypical $tgportfolios
C) institutional $tgownership $tgof $tgcommon $tgstocks
D) the $tgtimeliness $tgof $tginformation $tgavailable $tgto
$tginvestors $tgAnswer: $ t g A
Learning $tgOutcome: $ t g F-12 $tgDiscuss $tgthe $tgimplications $tgof $tgsystematic $tgrisk $tgin $tgfinancial
$tgmarkets $tgand $tgits $tgrole $tgin $tgshaping $tginvestment $tgchoices
2
, AACSB: $ t g 3 $tgAnalytical $tgthinking
$tgQuestion $tgStatus: $ t g Previous $tgEdition
$tgLearning $tgGoal: $ t g Learning $tgGoal $tg1
3
