1) The beta of a portfolio is a weighted average of each
asset’s beta coefficient.
2) Call options, unlike warrants, may be written by individuals.
3) If a bond sells for a discount, the yield to maturity exceeds the current yield.
4) If a 200-day moving average equals the current market price of a stock, that suggests
the stock’s price will stagnate.
5) Buying a stock index option reduces systematic risk.
6) A Eurodollar CD is a certificate of deposit issued in the United States by a foreign
bank.
7) Selling a commodity contract is a long position.
8) One source of risk associated with investments in bonds is the possibility of default.
9) If a stock has a beta of 1.0, it is riskfree stock.
10) A covered call is constructed by buying the stock and selling the call.
11) Some firms have more than one class of common stock.
12) If the country’s exports increase, GDP declines.
13) The tendency of individual stock prices to move together is one source of
systematic risk.
14) Being familiar with a company often results in individuals buying stock (e.g.,
buying the stock in the company for which they work).
15) If a stock is quoted 1213, an investor can sell the
stock for 13.
16) The purpose of the full disclosure laws is so investors
will not make poor investments.
17) Mutual funds reduce unsystematic risk but not systematic risk.