1) Convertible bonds are often subordinated to the firm’s other debt.
2) Dividends are the primary source of returns from an investment in a mutual fund.
3) If the price of an option to buy stock were to sell for less than its strike price, an
opportunity for arbitrage exists.
4) If foreign securities markets are as efficient as U. S. securities markets, then foreign
investments may offer the U. S. investor no advantages over investing in domestic
securities.
5) Both corporate earnings and cash dividends received by stockholders are taxed by
the federal government.
6) The exdividend date follows the date of record.
7) The prices of zero coupon bonds fluctuate less than bonds with large coupons.
8) The daily limit establishes the maximum amount by which the price of a futures
contract may rise or fall during a day.
9) The more financially leveraged a firm, the smaller is its debt ratio.
10) Market makers guarantee to buy and sell at least one round lot at the prices they
quote.
11) Capital losses may not be used to offset capital gains.
12) When a call option is exercised, new stock is issued.