Question 1

Investment professionals who take companies public, arrange mergers and acquisitions, and participate in municipal bond issues are:

Accepted Answer

A)  registered representatives. 
B)  security analysts. 
C)  investment bankers. 
D)  portfolio managers. 
A)  registered representatives. 
B)  security analysts. 
C)  investment bankers. 
D)  portfolio managers.

Question 2

Which of the following investment areas relies heavily on mathematical and statistical models?

Accepted Answer

A)  Security analysis 
B)  Portfolio management 
C)  Institutional investing 
D)  Retirement planning 
A)  Security analysis 
B)  Portfolio management 
C)  Institutional investing 
D)  Retirement planning

Question 3

Risk is defined as the possibility of loss.

Accepted Answer

A) True 
 B)False

Question 4

Security analysis is most concerned with:

Accepted Answer

A)  analysis of the overall securities market and its direction. 
B)  valuation and analysis of individual securities. 
C)  purchasing securities at the best price. 
D)  determination of the investor's required return. 
A)  analysis of the overall securities market and its direction. 
B)  valuation and analysis of individual securities. 
C)  purchasing securities at the best price. 
D)  determination of the investor's required return.

Question 5

Which of the following statements concerning global stock market capitalization is true?

Accepted Answer

A)  The United States accounts for roughly 65 percent of stock market capitalization worldwide. 
B)  The United States accounts for roughly 40 percent of stock market capitalization worldwide. 
C)  The United States accounts for roughly 25 percent of stock market capitalization. 
D)  It is expected that the United States will increase its future percentage of global stock market capitalization. 
A)  The United States accounts for roughly 65 percent of stock market capitalization worldwide. 
B)  The United States accounts for roughly 40 percent of stock market capitalization worldwide. 
C)  The United States accounts for roughly 25 percent of stock market capitalization. 
D)  It is expected that the United States will increase its future percentage of global stock market capitalization.

Question 6

A 25-year old college graduate is participating in a 401(k) retirement plan and wishes to minimize risk by eliminating stock-based mutual funds and other equities from his investment portfolio. What will this probably do to his ending retirement funds in 40 years?

Accepted Answer

If he minimizes risk, then he

Question 7

The investment professionals that arrange the sale of new securities are called:

Accepted Answer

A)  arbitragers. 
B)  traders. 
C)  investment bankers. 
D)  specialists. 
A)  arbitragers. 
B)  traders. 
C)  investment bankers. 
D)  specialists.

Question 8

Define risk in the context of investments.

Accepted Answer

Risk is the chance t

Question 9

Due to the Internet, institutional investors have gained in importance.

Accepted Answer

A) True 
 B)False

Question 10

The risk-free return (RF) equals:

Accepted Answer

A)  0.0%. 
B)  the rate on the bonds of financially sound corporations. 
C)  the average of the last 3 years' inflation rate. 
D)  the return on Treasury securities. 
A)  0.0%. 
B)  the rate on the bonds of financially sound corporations. 
C)  the average of the last 3 years' inflation rate. 
D)  the return on Treasury securities.

Question 11

Most financial advisors are registered with the Securities and Exchange Commission as:

Accepted Answer

A)  registered representatives. 
B)  registered investment advisors. 
C)  registered financial planners. 
D)  registered securities consultants. 
A)  registered representatives. 
B)  registered investment advisors. 
C)  registered financial planners. 
D)  registered securities consultants.

Question 12

One reason for the declining importance of pension funds is the:

Accepted Answer

A)  decrease in pension benefits for workers. 
B)  downsizing of U.S. companies. 
C)  large number of conversions into self-directed plans. 
D)  increasing number of federal regulations that restrict pension fund portfolios. 
A)  decrease in pension benefits for workers. 
B)  downsizing of U.S. companies. 
C)  large number of conversions into self-directed plans. 
D)  increasing number of federal regulations that restrict pension fund portfolios.

Question 13

Martha Stewart was banned from serving as an officer of a public corporation, sentenced to 5 months in prison, and fined $30,000. Why?

Accepted Answer

Contrary to popular belief, sh

Question 14

What is the primary advantage of blockchain technology and the cryptocurrencies that are enabled by it? How many different cryptocurrencies exist?

Accepted Answer

Blockchain technology has the potential

Question 15

The rise of the Internet has:

Accepted Answer

A)  greatly increased the cost of security trading. 
B)  significantly democratized the flow of investment information. 
C)  led to fewer discount brokers. 
D)  led to large amounts of security fraud. 
A)  greatly increased the cost of security trading. 
B)  significantly democratized the flow of investment information. 
C)  led to fewer discount brokers. 
D)  led to large amounts of security fraud.

Question 16

Which of the following is not a benefit of geographic diversification?

Accepted Answer

A)  Gaining exposure to currencies other than the U.S. dollar. 
B)  Some global markets have growth rates higher than the U.S., offering potentially higher returns. 
C)  Global markets behave completely independently of U.S. markets. 
D)  Many global markets are not highly correlated with U.S. markets. 
A)  Gaining exposure to currencies other than the U.S. dollar. 
B)  Some global markets have growth rates higher than the U.S., offering potentially higher returns. 
C)  Global markets behave completely independently of U.S. markets. 
D)  Many global markets are not highly correlated with U.S. markets.

Question 17

Underlying all investments is the tradeoff between:

Accepted Answer

A)  expected return and actual return. 
B)  low risk and high risk. 
C)  actual return and high risk. 
D)  expected return and risk. 
A)  expected return and actual return. 
B)  low risk and high risk. 
C)  actual return and high risk. 
D)  expected return and risk.

Question 18

A 401(k) plan is an example of a defined-benefit retirement plan.

Accepted Answer

A) True 
 B)False

Question 19

The two major considerations in investing are return and timing.

Accepted Answer

A) True 
 B)False

Question 20

Martha Stewart was convicted of:

Accepted Answer

A)  insider trading. 
B)  obstruction of justice. 
C)  manipulating stock prices. 
D)  participating in a Ponzi scheme. 
A)  insider trading. 
B)  obstruction of justice. 
C)  manipulating stock prices. 
D)  participating in a Ponzi scheme.

Exam 1: Understanding Investments

Investment professionals who take companies public, arrange mergers and acquisitions, and participate in municipal bond issues are:

Which of the following investment areas relies heavily on mathematical and statistical models?

Risk is defined as the possibility of loss.

Security analysis is most concerned with:

Which of the following statements concerning global stock market capitalization is true?

A 25-year old college graduate is participating in a 401(k) retirement plan and wishes to minimize risk by eliminating stock-based mutual funds and other equities from his investment portfolio. What will this probably do to his ending retirement funds in 40 years?

The investment professionals that arrange the sale of new securities are called:

Define risk in the context of investments.

Due to the Internet, institutional investors have gained in importance.

The risk-free return (RF) equals:

Most financial advisors are registered with the Securities and Exchange Commission as:

One reason for the declining importance of pension funds is the:

Martha Stewart was banned from serving as an officer of a public corporation, sentenced to 5 months in prison, and fined $30,000. Why?

What is the primary advantage of blockchain technology and the cryptocurrencies that are enabled by it? How many different cryptocurrencies exist?

The rise of the Internet has:

Which of the following is not a benefit of geographic diversification?

Underlying all investments is the tradeoff between:

A 401(k) plan is an example of a defined-benefit retirement plan.

The two major considerations in investing are return and timing.

Martha Stewart was convicted of:

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

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