Question

TRUE OR FALSE

1) A non-interest bearing checking account is still considered an investment.

2) Earning a high rate of return with little or no risk is a realistic investment goal.

3) Underwriters are responsible for promoting and facilitating the sale of securities.

4) Only U.S. corporations can list their stocks on the NYSE.

5) A market maker brings together buyers and sellers in an auction market.

6) Margin trading requires the borrowing of securities.

7) An investor who mistakenly buys the wrong stock because the symbols are similar has 24 hours to undo the trade.

8) Investors who are aware of current economic, political, and market events tend to make better investment decisions.

9) An index measures the current value of a group of stocks in relation to a base value established previously.

10) The basic function of stockbrokers is to execute client orders at the best possible price.

11) Investors can be confidently predict future returns on an investment by studying its past performance.

12) Meaningful measures of an investment's return must consider both income and capital gains.

13) The financial concept of time value of money is dependent upon the opportunity to earn interest over time.

14) Compound interest is interest paid not only on the initial investment but also on any interest earned after the initial investment.

15) If the discount rate is appropriate for the level of risk, a satisfactory investment will have a present value of benefits equal to or greater than than the present value of costs.

16) The required return on a risky investment includes a real rate of return, an inflation premium and a risk premium.

17) If the risk-free rate of return is less than the inflation rate, the real rate of return is negative.

18) A portfolio that offers the lowest risk for a given level of return is known as an efficient portfolio.

19) If the actual rate of return on an investment portfolio is constant from year to year, the standard deviation of that portfolio is zero.

20) Most assets show a slight degree of negative correlation.

Answer 1

1) A non-interest bearing checking account is still considered an investment.	FALSE, since investment should earn returns.
2) Earning a high rate of return with little or no risk is a realistic investment goal.	FALSE, Return and risk are correlated and move in same direction. High return entails high risk
3) Underwriters are responsible for promoting and facilitating the sale of securities.	TRUE
4) Only U.S. corporations can list their stocks on the NYSE.	FALSE, Even foreign companies can list subject to terms and conditions
5) A market maker brings together buyers and sellers in an auction market.	FALSE. A market maker is effectively a individual that buys and sells securities in market to make profit from spread
6) Margin trading requires the borrowing of securities.	FALSE, it requires borrowing of funds
7) An investor who mistakenly buys the wrong stock because the symbols are similar has 24 hours to undo the trade.	FALSE
8) Investors who are aware of current economic, political, and market events tend to make better investment decisions.	TRUE, stock markets are affected by various factors hence understanding of the said factors help make better investment
9) An index measures the current value of a group of stocks in relation to a base value established previously.	TRUE
10) The basic function of stockbrokers is to execute client orders at the best possible price.	TRUE
11) Investors can be confidently predict future returns on an investment by studying its past performance.	FALSE
12) Meaningful measures of an investment's return must consider both income and capital gains.	TRUE
13) The financial concept of time value of money is dependent upon the opportunity to earn interest over time.	TRUE
14) Compound interest is interest paid not only on the initial investment but also on any interest earned after the initial investment.	TRUE
15) If the discount rate is appropriate for the level of risk, a satisfactory investment will have a present value of benefits equal to or greater than than the present value of costs.	TRUE
16) The required return on a risky investment includes a real rate of return, an inflation premium and a risk premium.	TRUE
17) If the risk-free rate of return is less than the inflation rate, the real rate of return is negative.	TRUE
18) A portfolio that offers the lowest risk for a given level of return is known as an efficient portfolio.	TRUE
19) If the actual rate of return on an investment portfolio is constant from year to year, the standard deviation of that portfolio is zero.	TRUE
20) Most assets show a slight degree of negative correlation.	FALSE