1) A portfolio consisting of securities whose returns are highly correlated is not truly
diversified.
2) The interest earned on federal government’s debt is exempt from state income
taxation.
3) If a bond sells for a premium, the current yield exceeds the yield to maturity.
4) Portfolio assessment should include measures of both risk and return.
5) Cumulative voting gives more power to minority
stockholders.
6) The coupon on the variable interest rate bond varies with changes in interest rates.
7) Investors seek to minimize risk for a given return.
8) If investors believe technical analysis, its predictions may become self-fulfilling.
9) Deflation is a period of rising employment.
10) The shares of hedge funds are registered with the SEC.
11) Short-term capital gains are subject to higher tax rates than long-term capital gains.
12) Cash flow depends on depreciation as well as the firm’s earnings.
13) When a firm makes a profitable sale, its total assets increase.
14) Because of the small cash outlay to buy an option, these securities are considered to
be conservative investments.
15) A few bonds called “perpetuals” never mature.
16) The calculation of a rate of return assumes dividend income is reinvested at the
current dividend yield.
17) Contributions to a Roth IRA are not tax-deductible.
18) Split coupon bonds offer investors special tax advantages.