1) Buying a futures contract is a long position.
2) If a $1,000 bond with a 7 percent coupon were to sell for $978, the current interest
rate exceeds 7 percent.
3) In a well-diversified portfolio, the risk associated with fluctuations in securities
prices (i.e., the market) is reduced.
4) If a firm operates at a loss, its retained earnings
are decreased.
5) Noload funds with 12b1 fees are able to charge their existing shareholders for
marketing expenses.
6) Currency futures refer to contracts to buy and sell foreign moneys (i.e., foreign
exchange).
7) A recession is a period of rising employment.
8) A higher payout ratio implies a lower growth rate.
9) The current yield and the yield to maturity are equal
if a bond sells for its par value.
10) The price of a stock generally adjusts downward for the distribution of dividends.
11) Stock index options permit investors to establish a position in the market without
having to select individual stocks.
12) The discount paid for the shares of a closedend
investment company is fixed by the firm.
13) With dollarcost averaging, the investor purchases more securities when their prices
rise.
14) The amount in a Keogh account appears on the investor’s estimate of cash receipts
and disbursements.
15) If the Federal Reserve sells securities, that reduces commercial banks’ capacity to
lend.
16) If the underwriter overprices a new issue, the market price of the securities will rise.
17) The hedge ratio indicates the number of call options that is necessary to offset price
movements in the underlying stock.
18) The shares of closedend investment companies that invest in foreign securities may
sell for a premium over their net asset values.
19) Stock splits and stock dividends increase the earning capacity of the firm.