1) A series of equal payments is called an annuity.
2) Beta coefficients may be computed for investment companies and used to compute
riskadjusted rates of return.
3) The Dow Jones industrial and utility averages include a relatively small number of
stocks.
4) If the investor buys stock on margin and the price falls, the percentage loss is
magnified.
5) The concept of the time value of money is a means
to bring together the present and the future.
6) Once a stock has been sold, the investor receives a confirmation specifying the
amount to be remitted (i.e., paid).
7) Hedging using commodity futures locks in a price for
the supplier of a commodity.
8) An individual’s net worth is determined by subtracting liabilities from assets.
9) A warrant is an option issued by a corporation to buy its stock at a specified price
within a specified time period.
10) Many unit trusts are selfliquidating.
11) A negatively sloped yield curve occurs when short-term rates exceed longterm rates.
12) Since neither the SEC nor the Federal Reserve have jurisdiction over commodity
trading, these markets are unregulated.
13) The efficient market hypothesis suggests that the current prices of stocks reflect
what the investment community believes the stocks are worth.
14) Stock dividends increase the firm’s cash.
15) A diversified portfolio of highyield securities may be achieved with ten or fewer
bonds.