Question 1

Which of the following professionals would be considered an institutional investor?

Accepted Answer

A)  Investment banker 
B)  Security analyst 
C)  Stockbroker 
D)  Portfolio manager 
A)  Investment banker 
B)  Security analyst 
C)  Stockbroker 
D)  Portfolio manager D

Question 2

International investing:

Accepted Answer

A)  is only practical for institutional investors. 
B)  increases the overall risk of a stock portfolio. 
C)  always leads to higher returns than a domestic portfolio. 
D)  can reduce risk due to increased diversification. 
A)  is only practical for institutional investors. 
B)  increases the overall risk of a stock portfolio. 
C)  always leads to higher returns than a domestic portfolio. 
D)  can reduce risk due to increased diversification. D

Question 3

Technically, investments include:

Accepted Answer

A)  only financial assets. 
B)  only marketable assets. 
C)  financial and real assets that are marketable or non-marketable. 
D)  only financial and real assets that are marketable. 
A)  only financial assets. 
B)  only marketable assets. 
C)  financial and real assets that are marketable or non-marketable. 
D)  only financial and real assets that are marketable. C

Question 4

Will risk-averse investors ever include commodity futures or options in their portfolios? Explain.

Accepted Answer

They may include these items in their po

Question 5

Which of the following is the best definition of wealth?

Accepted Answer

A)  The sum of all current and future income 
B)  The total of all assets and all income 
C)  The total of assets and income less any liabilities 
D)  The sum of current income and the present value of future income 
A)  The sum of all current and future income 
B)  The total of all assets and all income 
C)  The total of assets and income less any liabilities 
D)  The sum of current income and the present value of future income

Question 6

Investors always seek to minimize their risk of investing.

Accepted Answer

A) True 
 B)False

Question 7

What are some of the steps involved in valuing a company's common stock?

Accepted Answer

The investor must evaluate the overall e

Question 8

Blockchain technology is the underlying process that enables the existence of cryptocurrencies.

Accepted Answer

A) True 
 B)False

Question 9

Investors unwilling to assume risk should be satisfied with the rate of inflation as their investment return.

Accepted Answer

A) True 
 B)False

Question 10

The minimum actual return necessary to induce investors to invest is known as the expected return.

Accepted Answer

A) True 
 B)False

Question 11

Bond yields in some European countries have been negative in recent years.

Accepted Answer

A) True 
 B)False

Question 12

Security analysts are typically employed only at brokerage houses.

Accepted Answer

A) True 
 B)False

Question 13

Most investors are risk averse, which means they:

Accepted Answer

A)  will assume more risk only if they are compensated by higher expected return. 
B)  will always invest in the investment with the lowest possible risk. 
C)  actively seek to minimize their risks. 
D)  avoid the stock market due to the high degree of risk. 
A)  will assume more risk only if they are compensated by higher expected return. 
B)  will always invest in the investment with the lowest possible risk. 
C)  actively seek to minimize their risks. 
D)  avoid the stock market due to the high degree of risk.

Question 14

Both 401(k) plans and IRAs are self-directed retirement plans.

Accepted Answer

A) True 
 B)False

Question 15

In general, the ex ante risk-return tradeoff:

Accepted Answer

A)  slopes upward. 
B)  slopes downward. 
C)  is flat. 
D)  is impossible to determine. 
A)  slopes upward. 
B)  slopes downward. 
C)  is flat. 
D)  is impossible to determine.

Question 16

What are some of the career opportunities in the investment industry?

Accepted Answer

Investment banker, merger and

Question 17

Regulation FD applies to disclosure between:

Accepted Answer

A)  private companies and public officials. 
B)  public companies and investment professionals. 
C)  public companies and public officials. 
D)  private companies and investment professionals. 
A)  private companies and public officials. 
B)  public companies and investment professionals. 
C)  public companies and public officials. 
D)  private companies and investment professionals.

Question 18

Gold coins would be classified as:

Accepted Answer

A)  real assets. 
B)  indirect assets. 
C)  personal assets. 
D)  financial assets. 
A)  real assets. 
B)  indirect assets. 
C)  personal assets. 
D)  financial assets.

Question 19

Retirement plans that guarantee a set amount of money each month are known as:

Accepted Answer

A)  401(k) plans. 
B)  self-directed plans. 
C)  defined-benefit plans. 
D)  defined-contribution plans. 
A)  401(k) plans. 
B)  self-directed plans. 
C)  defined-benefit plans. 
D)  defined-contribution plans.

Question 20

Which of the following would be considered a risk-free investment?

Accepted Answer

A)  Gold 
B)  Equity in a house 
C)  High-grade corporate bond 
D)  U.S. Treasury security 
A)  Gold 
B)  Equity in a house 
C)  High-grade corporate bond 
D)  U.S. Treasury security

Exam 1: Understanding Investments

Which of the following professionals would be considered an institutional investor?

International investing:

Technically, investments include:

Will risk-averse investors ever include commodity futures or options in their portfolios? Explain.

Which of the following is the best definition of wealth?

Investors always seek to minimize their risk of investing.

What are some of the steps involved in valuing a company's common stock?

Blockchain technology is the underlying process that enables the existence of cryptocurrencies.

Investors unwilling to assume risk should be satisfied with the rate of inflation as their investment return.

The minimum actual return necessary to induce investors to invest is known as the expected return.

Bond yields in some European countries have been negative in recent years.

Security analysts are typically employed only at brokerage houses.

Most investors are risk averse, which means they:

Both 401(k) plans and IRAs are self-directed retirement plans.

In general, the ex ante risk-return tradeoff:

What are some of the career opportunities in the investment industry?

Regulation FD applies to disclosure between:

Gold coins would be classified as:

Retirement plans that guarantee a set amount of money each month are known as:

Which of the following would be considered a risk-free investment?

Investment Alternatives

Indirect Investing

Securities Markets and Market Indexes

How Securities Are Traded

The Risk and Return From Investing

Portfolio Theory

Portfolio Selection and Asset Allocation

Capital Market Theory and Asset Pricing Models

Common Stock Valuation

Common Stocks: Analysis and Strategy

Market Efficiency

Economymarket Analysis

Sectorindustry Analysis

Company Analysis

Technical Analysis

Bond Yields and Prices

Bonds: Analysis and Strategy

Options

Futures Contracts

Managing Your Financial Assets

Evaluation of Investment Performance

Filters