Essay on Investment

1611 Words Dec 26th, 2014 7 Pages
Chapter 1
UNDERSTANDING INVESTMENTS

Multiple Choice Questions

Establishing a Framework for Investors

1. Which of the following is the best definition of wealth?

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.

(d, moderate)

2. Stocks and bonds would be classified as:

a. real assets b. indirect assets c. personal assets d. financial assets

(d, easy)

3. Technically, investments include:

a. only financial assets. b. only marketable assets. c. financial
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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.

(c, difficult)

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

a. registered representatives. b. registered investor advisors. c. registered financial planners. d. registered securities consultants.

(b, moderate)

10. A Chartered Financial Analyst designation is a (an)

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

(c, easy)

Understanding the Investment Decision Process

11. Underlying all investments is the tradeoff between:

a. expected return and actual return b. low risk and high risk c. actual return and high risk d. expected return and risk

(d, moderate)

12. Which of the following investment areas is heavily tied to work using mathematical and statistical models?

a. Security analysis b. Portfolio management c. Institutional

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