1) As interest rates increase, the probability that a
convertible bond will be called declines.
2) Acquiring shares in no load funds is one means to avoid 12b-1 fees.
3) The larger the rate of interest, the smaller is the
future value of a dollar.
4) A tight monetary policy should generate a higher required return for common stock.
5) Money market mutual funds acquire short-term money market instruments such as
commercial paper.
6) Capital gains and income are the sources of the return on an investment.
7) The present value of an annuity due exceeds the
present value of an ordinary annuity.
8) The greater the numerical value of the debt ratio, the riskier the firm.
9) A “lock-up” refers to a security transaction with an assured profit.
10) Diversification reduces reinvestment rate risk.
11) While the investor is able to reduce assetspecific risk, other sources of risk remain.
12) The cost of carrying a commodity suggests that the futures price will be less than
the spot price.