1) ADRs pay dividends in foreign currencies.
2) If interest rates decline, the expected life of a Ginnie Mae bond is reduced.
3) The smaller a bond’s coupon implies a longer duration.
4) Asset allocation is important to help diversify a portfolio but has little impact on the
portfolio’s return.
5) The only costs of investing in a closedend investment company are the commissions
to buy and sell the shares.
6) Short-term capital losses are used to offset long-term losses for the purpose of
taxation.
7) The smaller the duration, the more volatile the bond’s price.
8) According to the Black/Scholes option valuation model, the value of a call option
rises as it approaches expiration.
9) From the viewpoint of the investor, preferred stock is riskier than bonds issued by the
same firm.
10) Changes in the price of gold are often related to the anticipation of inflation.
11) The load fee charged by a mutual fund is paid when the shares are sold.
12) The Dogs of the Dow strategy suggests buying the lowest dividend yields of the
Dow stocks.
13) M2 is a narrower definition of the money supply and excludes savings accounts in
commercial banks.
14) The SEC establishes the price of a new stock issue.
15) The time premium paid for an option reduces the option’s potential leverage.