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The premium of warrants tends to decrease as the stock price rises.
Long-term capital gains are taxed at a higher tax rate than dividends.
A negative aspect of diamond investments is the relatively high cost of buying and
selling them.
Based on dollar volume of stocks and bonds, the NASDAQ is the second largest of all
markets in the United States.
The intrinsic value of a call option equals the market price minus the strike price of the
option.
In a leveraged buyout, the company's balance sheet serves as a collateral base to make
the borrowing possible.
If a corporate treasurer wants to hedge against interest rate increases on a new bond
issue to be floated, he can sell short in the futures market.
Money market funds are usually load funds.
Unsystematic risk cannot be diversified away.
The Russell 2000 measures performance of the 2000 largest stocks, based on market
value.
The idea that stock prices tend to move in trends that persist for long periods, and that
these trends can be detected in charts, are basic assumptions of fundamental analysis.
Unlike the capital market line, the security market line is unique for each investor.
The investment banker assumes a price risk under a best efforts agreement.
The value of the comparable sales approach to real estate valuation is that it is highly
theoretical.
Companies usually force conversion when conversion values are low.
Empirical evidence indicates that rising dividends are no guarantee that the associated
common stock price will also rise in the short run.
There is a good opportunity to achieve abnormal gains by investing in either the
acquiring company's or acquired company's stock.
Risk measurement usually considers only losses rather than the dispersion of all
outcomes.
Corporate diversification eases the task of the financial analyst.
Most commodity futures contracts are closed out before the actual transaction is to take
place.
Option contracts expire on the last Friday of the month.
There is often a place for real assets in a truly diversified portfolio.
A put is an option to buy 100 shares of common stock at a specified price for a given
period of time.
A firm with an average return on assets, but a high return on equity, was probably able
to achieve this by keeping debt down to a very low level.
The largest segment of the Over-the-Counter (OTC) Market, in terms of dollar volume,
is the U.S. government securities markets.
Inflation-adjusted financial statements may be shown as supplements to the historical
cost financial statements.
Political risk can best be effectively reduced or eliminated by investing only in
companies of European countries.
The Barron's Confidence Index is based on the premise that bond traders, being more
sophisticated than stock traders, pick up trends more quickly.
Leading indicators change direction in advance of general business conditions and are
of prime importance to investors who want to forecast rising profits and stock prices.
Liquidity can be measured by the ability of the investor to convert an investment into
cash within a relatively long period of time, at its fair book value.
Which of the following statements about hedging a stock portfolio with stock index
futures is NOT true?
A.Futures contracts magnify gains (or losses) on the stock portfolio
B.In a declining market, futures contracts help offset losses on the portfolio
C.A risk-taker would probably not hedge the entire portfolio with stock index futures
D.All of the above are true
Between 1926 and 2009, the mean return of large company stocks was:
A. 8.4%.
B. 9.4%.
C. 9.8%.
D. 11.4%.
E. 12.4%.
