1) If an investor believes that financial markets are inefficient, that argues for the
individual to pursue a more active portfolio strategy.
2) If a stock increased from $25 to $50 in five years, the annual rate of return was 20
percent.
3) The maximum potential profit on a covered call is the time premium paid for the
stock.
4) A hedge fund is a conservative type of mutual fund.
5) Investors must bear the systematic risk associated with fluctuating securities prices.
6) Compared to selecting individual stocks, ETFs ease the process of constructing a
well diversified portfolio.
7) Stocks are initially sold in the primary market and subsequently traded in the
secondary market.
8) Pension plans permit investors to defer income tax.
9) A mortgage trust is a REIT that specializes in mortgage loans.
10) Historical studies of investment returns suggest that the stocks of small companies
generate higher returns than the stocks of larger companies.