Question 1

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 number of 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 number of discount brokers 
D) led to large amounts of security fraud. B

Question 2

Many Wall Street jobs tend to be cyclical in nature..

Accepted Answer

A) True 
 B)False  True

Question 3

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 4

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

Accepted Answer

Investment banker,merger and a

Question 5

Investment decision making traditionally consists of two steps:

Accepted Answer

A) investment banking and security analysis 
B) buying and selling 
C) risk and expected return. 
D) security analysis and portfolio management. 
A) investment banking and security analysis 
B) buying and selling 
C) risk and expected return. 
D) security analysis and portfolio management.

Question 6

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 7

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 8

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 9

The retirement plans that guarantee retirees 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 10

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

Accepted Answer

A) True 
 B)False

Question 11

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 12

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

Accepted Answer

A) True 
 B)False

Question 13

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 14

Briefly explain the difference between expected returns and realized returns and between ex ante returns an ex post returns.

Accepted Answer

Expected returns are mean returns based

Question 15

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.

Question 16

Which of the following statements is true regarding multi-national corporations?

Accepted Answer

A) Both Exxon Mobil and Hewlett Packard earn roughly 70% of their profits from their overseas operations. 
B) Google currently derives about 95% of its earnings from the U.S. 
C) Wal-Mart earns nearly 50% of its profits outside the U.S. 
D) Coca-Cola has no overseas operations and no earnings outside the U.S.at all 
A) Both Exxon Mobil and Hewlett Packard earn roughly 70% of their profits from their overseas operations. 
B) Google currently derives about 95% of its earnings from the U.S. 
C) Wal-Mart earns nearly 50% of its profits outside the U.S. 
D) Coca-Cola has no overseas operations and no earnings outside the U.S.at all

Question 17

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 18

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

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) The United States accounts for roughly 85 percent of stock market capitalization worldwide. 
B) The United States accounts for roughly 50 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 percentage of stock market capitalization in the world over time. 
A) The United States accounts for roughly 85 percent of stock market capitalization worldwide. 
B) The United States accounts for roughly 50 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 percentage of stock market capitalization in the world over time.

Question 20

Financial planners must pass a standardized test and possess certain credentials.

Accepted Answer

A) True 
 B)False

Exam 1: Understanding Investments

The rise of the Internet has:

Many Wall Street jobs tend to be cyclical in nature..

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

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

Investment decision making traditionally consists of two steps:

Underlying all investments is the tradeoff between:

Regulation FD applies to disclosure between:

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

The retirement plans that guarantee retirees a set amount of money each month are known as:

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

Security analysis is most concerned with:

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

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

Briefly explain the difference between expected returns and realized returns and between ex ante returns an ex post returns.

International investing:

Which of the following statements is true regarding multi-national corporations?

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

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

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

Financial planners must pass a standardized test and possess certain credentials.

Investment Alternatives

Indirect Investing

Securities Markets and Market Indexes

How Securities Are Traded

The Risks and Returns From Investing

Portfolio Theory

Portfolio Selection

Asset Pricing Models

Common Stock Valuation

Common Stocks: Analysis

Market Efficiency

Economy Market Analysis

Industry Analysis

Company Analysis

Technical Analysis

Bond Yields

Bonds: Analysis and Strategy

Options

Futures

Portfolio Management

Evaluation of Investment

Filters