1) The CBOE is a secondary market for put and call options.
2) Since ETFs mimic an index, they do not buy individual shares of stock.
3) Programmed trading (index arbitrage) transfers changes in the futures markets to the
stock market.
4) According to the efficient market hypothesis, purchasing companies with high cash
flow should produce superior investment results.
5) A bond that is traded “flat” has a fixed coupon.
6) If a closed-end investment company were liquidated, the investor should receive the
net asset value minus the cost of the liquidation.
7) A major function of organized securities markets is to facilitate the transfers of
securities among investors.
8) Interest earned on series EE bonds is exempt from federal income taxation.
9) Few investors believe they are smarter than other investors and hence are not
overconfident.
10) Since there are many grades of corn, the seller of a contract may deliver any type of
corn.
11) A portfolio’s beta coefficient tends to be stable over time.
12) Treasury bills are longterm federal government securities sold at a discount.