Test Bank for Investments Analysis and Management, 15th Edition by Gerald R. Jensen| 9781394243754| All Chapters| UPDATED

Chapter One
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Understanding

,File: ch01: Understanding Investments
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Multiple Choice dd




1. Which of the following is the best definition of wealth?
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a. The dd sum dd of dd all current and future income
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b. The dd total of
dd dd all assets and all income
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c. The dd total of
dd dd assets and income less any liabilities
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d. The dd sum dd of dd current income and the present value of future income
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Ans: d
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Difficulty: Moderate dd


Ref: Establishing a Framework for Investors
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2. Gold coins would be classified as:
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a. real assets.
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b. indirect assets. dd


c. personal assets. dd


d. financial assets. dd




Ans: a
dd


Difficulty:
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Easy
Ref: Establishing a Framework for Investors
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3. Technically, investments include: dd dd




a. only financial assets.
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b. only marketable assets.
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c. financial and real assets that are marketable or non-marketable.
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d. only financial and real assets that are marketable.
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Ans: c
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Difficulty:
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Easy
Ref: Establishing a Framework for Investors
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4. The retirement plans that guarantee retirees a set amount of money
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each month are known as:
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a. 401(k) plans. dd


b. self-directed plans. dd


c. defined-benefit plans. dd


d. defined-contribution plans. dd




Chapter One dd 2
Understanding

,Ans: cdd


Difficulty: Moderate dd


Ref: Establishing a Framework for Investors
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5. The investment professionals that arrange the sale of new
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securities are called:
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a. arbitragers.
b. traders.
c. investment bankers. dd


d. specialists.

Ans: cdd


Difficulty: Moderate dd


Ref: The Importance of Studying Investments
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6. Another name for stockbrokers is:
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a. specialists.
b. financial advisors. dd


c. security analysts. dd


d. portfolio managers. dd




Ans: b
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Difficulty: Moderate dd


Ref: The Importance of Studying Investments
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7. Investment professionals who take companies public, arrange mergers
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and acquisitions, and participate in municipal bond issues are:
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a. registered representatives. dd


b. security analysts. dd


c. investment bankers. dd


d. portfolio managers. dd




Ans: cdd


Difficulty: Moderate dd


Ref: The Importance of Studying Investments
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8. One reason for the declining importance of pension funds is the:
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a. decrease in pension benefits for workers.
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b. downsizing of U.S. companies. dd dd dd


c. large number of conversions into self-directed plans.
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d. increasing number of federal regulations that restrict pension fund portfolios.
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Ans: cdd


Difficulty: Difficultdd


Ref: The Importance of Studying Investments
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Chapter Onedd 3
Understanding

, 9. Most financial advisors are registered with the Securities and
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Exchange Commission as:
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a. registered dd representatives.
b. registered dd investment advisors. dd


c. registered dd financial planners. dd


d. registered dd securities consultants. dd




Ans: b dd


Difficulty: Moderate dd


Ref: The Importance of Studying Investments
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10. A Chartered Financial Analyst designation is a(n)
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a. SEC-approved and awarded designation. dd dd dd


b. certification of a successful investing record.
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c. professional designation awarded for meeting recognized standards of
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conduct and competency.
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d. professional designation awarded by the brokerage industry.
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Ans: cdd


Difficulty:
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Easy
Ref: The Importance of Studying Investments
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11. Underlying all investments is the tradeoff between:
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a. expected return and actual return.
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b. low risk and high risk.
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c. actual return and high risk.
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d. expected return and risk. dd dd dd




Ans: d dd


Difficulty: Moderate dd


Ref: Understanding the Investment Decision Process
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12. Which of the following investment areas relies heavily on
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mathematical and statistical models?
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a. Security analysis dd


b. Portfolio management dd


c. Institutional investing dd


d. Retirement planning dd




Ans: b dd


Difficulty: Moderate dd


Ref: Understanding the Investment Decision Process
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Chapter One dd 4
Understanding