Test Bank & Solution Manual for Fundamentals
of investing, 14th Edition by Scott B. Smart
,Fundamentals fof fInvesting, f14e f(Smart/Zutter)
fChapter f1 f The fInvestment fEnvironment
1.1 Learning fGoal f1
1) A fnon-interest fbearing fchecking faccount fis fstill fconsidered fan finvestment.
fAnswer: f FALSE
Learning fOutcome: f F-12 fDiscuss fthe fimplications fof fsystematic frisk fin ffinancial fmarkets fand
fits frole fin fshaping finvestment fchoices
AACSB: f Analytical fthinking
fQuestion fStatus: f Previous fEdition
fLearning fGoal: f Learning fGoal f1
2) Land fand fbuildings fare fexamples fof freal fproperty finvestments.
fAnswer: f TRUE
Learning fOutcome: f F-12 fDiscuss fthe fimplications fof fsystematic frisk fin ffinancial fmarkets fand
fits frole fin fshaping finvestment fchoices
AACSB: f Analytical fthinking
fQuestion fStatus: f Previous fEdition
fLearning fGoal: f Learning fGoal f1
3) Since f1900, fthe faverage freturn fon fstocks fhas fexceeded fthe faverage freturn fon
fsavings faccounts fby fmore fthan f6 fpercentage fpoints.
Answer: f TRUE
Learning fOutcome: f F-12 fDiscuss fthe fimplications fof fsystematic frisk fin ffinancial fmarkets fand
fits frole fin fshaping finvestment fchoices
AACSB: f Analytical fthinking
fQuestion fStatus: f Previous fEdition
fLearning fGoal: f Learning fGoal f1
4) A fUnited fStates fSavings fBond fis fan fexample fof fan finvestment fas fdefined fin fthe
ftext. fAnswer: f TRUE
Learning fOutcome: f F-12 fDiscuss fthe fimplications fof fsystematic frisk fin ffinancial fmarkets fand
fits frole fin fshaping finvestment fchoices
AACSB: f Analytical fthinking
fQuestion fStatus: f Previous fEdition
fLearning fGoal: f Learning fGoal f1
5) Most fsources fof finvestment finformation fare fin fprint fformat, fexpensive, fand fdifficult
fto faccess.
Answer: f FALSE
Learning fOutcome: f F-12 fDiscuss fthe fimplications fof fsystematic frisk fin ffinancial fmarkets fand
fits frole fin fshaping finvestment fchoices
AACSB: f Analytical fthinking
fQuestion fStatus: f Previous fEdition
fLearning fGoal: f Learning fGoal f1
,6) Which fof fthe ffollowing fis fNOT fan finvestment fas fdefined fin fthe ftext?
A) a fcertificate fof fdeposit fissued fby fa fbank
B) a fnew fautomobile
C) a fUnited fStates fSaving fBond
D) a fmutual ffund fheld fin fa fretirement faccount
fAnswer: f B
Learning fOutcome: f F-12 fDiscuss fthe fimplications fof fsystematic frisk fin ffinancial fmarkets fand
fits frole fin fshaping finvestment fchoices
AACSB: f Analytical fthinking
fQuestion fStatus: f Previous fEdition
fLearning fGoal: f Learning fGoal f1
7) Stocks fare fa(n) f investment frepresenting f of fa fbusiness.
A) direct; fownership
B) direct; fdebt
C) indirect; fownership
D) indirect; fdebt
fAnswer: f A
Learning fOutcome: f F-12 fDiscuss fthe fimplications fof fsystematic frisk fin ffinancial fmarkets fand
fits frole fin fshaping finvestment fchoices
AACSB: f Analytical fthinking
fQuestion fStatus: f Previous fEdition
fLearning fGoal: f Learning fGoal f1
8) An fexchange ftraded ffund fthat finvests fin fthe fstocks fof flarge fcorporations fis fan fexample fof
A) direct finvestment.
B) indirect finvestment.
C) derivative finvestment.
D) tangible finvestment.
Answer: f B
Learning fOutcome: f F-12 fDiscuss fthe fimplications fof fsystematic frisk fin ffinancial fmarkets fand
fits frole fin fshaping finvestment fchoices
AACSB: f Analytical fthinking
fQuestion fStatus: f Previous fEdition
fLearning fGoal: f Learning fGoal f1
9) Which fof fthe ffollowing fhas fdeclined fin frecent fyears?
A) direct fownership fof fstock fby findividual finvestors
B) the fpercentage fof fforeign fstocks fheld fin ftypical fportfolios
C) institutional fownership fof fcommon fstocks
D) the ftimeliness fof finformation favailable fto finvestors
fAnswer: f A
Learning fOutcome: f F-12 fDiscuss fthe fimplications fof fsystematic frisk fin ffinancial fmarkets fand
fits frole fin fshaping finvestment fchoices
AACSB: f Analytical fthinking
fQuestion fStatus: f Previous fEdition
fLearning fGoal: f Learning fGoal f1
, 10) Which fof fthe ffollowing fhas fincreased fin frecent fyears?
A) direct fownership fof fstock fby findividual finvestors
B) the fpercentage fof fdomestic fstocks fheld fin ftypical fportfolios
C) institutional fownership fof fcommon fstocks
D) indirect fownership fof fstocks fthrough fmutual ffunds fand fETFs.
fAnswer: f D
Learning fOutcome: f F-12 fDiscuss fthe fimplications fof fsystematic frisk fin ffinancial fmarkets fand
fits frole fin fshaping finvestment fchoices
AACSB: f Analytical fthinking
fQuestion fStatus: f New fQuestion
fLearning fGoal: f Learning fGoal f1
11) Debt frepresents ffunds floaned fin fexchange ffor
A) dividend fincome fand fthe frepayment fof fthe floan fprincipal.
B) dividend fincome fand fan fownership finterest fin fthe ffirm.
C) interest fincome fand fa fpartial fownership finterest fin fthe ffirm.
D) interest fincome fand fthe frepayment fof fthe floan fprincipal.
fAnswer: f D
Learning fOutcome: f F-12 fDiscuss fthe fimplications fof fsystematic frisk fin ffinancial fmarkets fand
fits frole fin fshaping finvestment fchoices
AACSB: f Analytical fthinking
fQuestion fStatus: f Previous fEdition
Answer: f FALSE
Learning fOutcome: f F-01 fDescribe fthe fdifferent ffinancial fmarkets fand fthe frole fof fthe ffinancial
fmanagers
AACSB: f Application fof fknowledge
fQuestion fStatus: f Previous fEdition
fLearning fGoal: f Learning fGoal f2
2) Institutional finvestors fare findividuals fwho finvest findirectly fthrough ffinancial
finstitutions. fAnswer: f FALSE
Learning fOutcome: f F-01 fDescribe fthe fdifferent ffinancial fmarkets fand fthe frole fof fthe ffinancial
fmanagers
AACSB: f Application fof fknowledge
fQuestion fStatus: f Previous fEdition
fLearning fGoal: f Learning fGoal f2
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