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Fundamentals of Investing, 13e (Smart)
Chapter 3 Investment Information and Securities Transactions
3.1 Learning Goal 1
1) Most brokers charge higher commissions for on-line trades than for telephone transactions.
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 1
2) On-line trading has greatly lowered the cost of buying and selling stock as well as greatly
increasing the speed of transactions.
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Revised
Learning Goal: Learning Goal 1
3) For most stocks, charts and tables of historical prices are only available through subscription
services.
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 1
4) You can utilize the Internet to develop financial plans and goals, analyze and select
individual investments and organize your portfolio.
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 1
2
5) An investor who mistakenly buys the wrong stock because the symbols are similar has 24
hours to undo the trade.
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 1
6) The tools and calculators available on the FINRA website are useful, but quite expensive to
use.
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 1
7) Investing online is usually less expensive than traditional methods.
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 1
8) The Internet provides
I. educational sites for financial investing.
II. the ability to trade securities on-line.
III. current information on stocks and bonds.
IV. analysts reports on individual stocks.
A) II and III only
B) III and IV only
C) I, II and III only
D) I, II, III and IV
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 1
3
9) Individuals can use the Internet to
I. analyze individual securities.
II. search for stocks that meet specific investment criteria.
III. organize their financial information.
IV. track the performance of their portfolio.
A) I and IV only
B) II and III only
C) I, III and IV only
D) I, II, III and IV
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 1
10) Individuals can now use the Internet to buy and sell
I. stocks.
II. bonds.
III. mutual funds.
IV. stock options.
A) I and IV only
B) II and III only
C) I, II and III only
D) I, II, III and IV
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 1
4
11) Information that can be found on the Internet at no cost includes
I. P/E ratios.
II. recent news about a company.
III. financial statements.
IV. future earnings and stock prices.
A) I and IV only
B) II and III only
C) I, II and III only
D) I, II, III and IV
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 1
12) Which one of the following can be considered a pitfall for investors new to on-line trading?
A) On-line trading is fast and efficient.
B) On-line investors tend to trade too frequently.
C) On-line trading is available to the average investor.
D) On-line investors pay lower costs per trade than investors using a broker.
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Revised
Learning Goal: Learning Goal 1
13) What are some of the tools available to investors on the internet (name at least 4)?
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: New Question
Learning Goal: Learning Goal 1
5
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3.2 Learning Goal 2
1) Analytical information would include such information as estimates of growth in sales and
future earnings.
managers
AACSB: 6 Diverse and multicultural work environments.
Question Status: Previous Edition
Learning Goal: Learning Goal 2
2) Reviewing industry and company information may provide guidance on the future outlook of
a particular firm.
managers
AACSB: 6 Diverse and multicultural work environments.
Question Status: Previous Edition
Learning Goal: Learning Goal 2
3) A listing of a firm’s major product lines and projections of future sales would both be
considered descriptive information.
managers
AACSB: 6 Diverse and multicultural work environments.
Question Status: New Question
Learning Goal: Learning Goal 2
4) Descriptive information might include the company’s lines of business, a list of major
competitors, and recent changes in management.
managers
AACSB: 6 Diverse and multicultural work environments.
Question Status: Previous Edition
Learning Goal: Learning Goal 2
5) Current price information on shares of a company’s stock is often accompanied by statistics
on the recent price behavior of that stock.
managers
AACSB: 6 Diverse and multicultural work environments.
Question Status: Previous Edition
Learning Goal: Learning Goal 2
6
6) Investors who are aware of current economic, political, and market events tend to make
better investment decisions.
managers
AACSB: 6 Diverse and multicultural work environments.
Question Status: Previous Edition
Learning Goal: Learning Goal 2
7) Chemical Week and the Oil and Gas Journal are considered to be general business
periodicals.
managers
AACSB: 6 Diverse and multicultural work environments.
Question Status: Previous Edition
Learning Goal: Learning Goal 2
8) Investors can usually find the financial statements of a firm on the firm‘s website.
managers
AACSB: 6 Diverse and multicultural work environments.
Question Status: Previous Edition
Learning Goal: Learning Goal 2
9) A “pump and dump” scheme involves buying shares of stock, hyping that stock via the
Internet and then quickly selling the shares at a profit.
managers
AACSB: 6 Diverse and multicultural work environments.
Question Status: Previous Edition
Learning Goal: Learning Goal 2
10) Charting is the technique of
A) plotting the performance of a security over time.
B) sorting through databases of securities to select one based on certain parameters.
C) monitoring a stock based on the underlying economic conditions.
D) determining the amount of money that must be saved based on a given financial goal.
managers
AACSB: 6 Diverse and multicultural work environments.
Question Status: Previous Edition
Learning Goal: Learning Goal 2
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11) Which of the following types of information will NOT be found in major urban
newspapers?
A) price quotations for stocks of local interest
B) stories concerning local business leaders
C) interest rates offered by local and national banks
D) real time price quotes for widely held stocks and exchange traded funds
managers
AACSB: 6 Diverse and multicultural work environments.
Question Status: Previous Edition
Learning Goal: Learning Goal 2
12) Which of the following is a general rather a financial newspaper?
A) The New York Times
B) Investor‘s Business Daily
C) The Wall Street Journal
D) Barron’s
managers
AACSB: 6 Diverse and multicultural work environments.
Question Status: Previous Edition
Learning Goal: Learning Goal 2
13) Which one of the following is NOT published by the U.S. Government?
A) Federal Reserve Bulletin
B) Survey of Current Business
C) Kiplinger Washington Letter
D) Economic Report of the President
managers
AACSB: 6 Diverse and multicultural work environments.
Question Status: Previous Edition
Learning Goal: Learning Goal 2
8
14) Regulation FD requires simultaneous disclosure of critical information simultaneously to
investment professionals and the general public with the exception of
A) brokerage firms.
B) hedge funds.
C) securities rating service such as Moody’s Investor Services and Standard & Poor‘s.
D) mutual fund managers.
managers
AACSB: 6 Diverse and multicultural work environments.
Question Status: Previous Edition
Learning Goal: Learning Goal 2
15) Which one of the following web sites should you utilize to review the financial information
in a company’s 10-K report?
A) freeedgar.com
B) valueline.com
C) wsj.com
D) finance.yahoo.com
managers
AACSB: 6 Diverse and multicultural work environments.
Question Status: Previous Edition
Learning Goal: Learning Goal 2
16) Which of the following is usually available on a companies website?
A) brokerage reports
B) annual reports
C) back-office reports
D) red herrings
managers
AACSB: 6 Diverse and multicultural work environments.
Question Status: Revised
Learning Goal: Learning Goal 2
9
17) The published analysis and recommendations of an individual brokerage firm is called a
A) prospectus.
B) comparative data source.
C) back-office research report.
D) broker’s subscription report.
managers
AACSB: 6 Diverse and multicultural work environments.
Question Status: Previous Edition
Learning Goal: Learning Goal 2
18) Assume you wanted to find the most current price for Home Depot’s stock. Your most
likely source would be
A) Yahoo Finance.
B) Investor‘s Business Daily.
C) The Granville Market Letter.
D) The Wall Street Journal.
managers
AACSB: 6 Diverse and multicultural work environments.
Question Status: New Question
Learning Goal: Learning Goal 2
19) Which one of the following statements about back-office research reports is FALSE?
A) They frequently include buy or sell recommendations.
B) They include analyses of current and future prospects for the securities markets.
C) They look at specific companies as well as industries.
D) They are only available to high-profile clients who maintain large accounts with the
brokerage firm.
managers
AACSB: 6 Diverse and multicultural work environments.
Question Status: Previous Edition
Learning Goal: Learning Goal 2
10
20) The Value Line Investment Survey includes which of the following reports?
I. Selection and Opinion
II. The Outlook
III. Ratings and Reports
IV. Summary and Index
A) I and II only
B) I, II and IV only
C) I, III and IV only
D) II, III and IV only
managers
AACSB: 6 Diverse and multicultural work environments.
Question Status: Previous Edition
Learning Goal: Learning Goal 2
21) Subscription letters are
A) sometimes geared to specific industries and companies.
B) available free on the Internet.
C) published on an annual basis.
D) descriptive in nature but do not offer investment advice.
managers
AACSB: 6 Diverse and multicultural work environments.
Question Status: Previous Edition
Learning Goal: Learning Goal 2
22) Which of the following sites is especially valuable for information concerning mutual
funds?
A) www.investopedia.com
B) www.morningstar.com
C) www.moody’s.com
D) www.bondsonline.com
managers
AACSB: 6 Diverse and multicultural work environments.
Question Status: Previous Edition
Learning Goal: Learning Goal 2