1) A short position is premised on securities prices rising.
2) If the ratio of debt to equity increases, the proportion of assets financed by debt is
increased.
3) The Wilshire stock index is more broad based than the S&P 500 stock index.
4) Stockbrokers set bid and ask prices.
5) Bull and Bear spreads require taking a long position in one option and a short
position in another option with a different strike price.
6) If a bond has a call feature, it usually also has a call penalty, which must be paid to
the bondholder in partial compensation for the early retirement of the bond.
7) An important advantage offered investors (speculators) by commodity futures is the
large amount of leverage.
8) The negative relationship between interest rates and securities prices is the source of
interest rate risk.
9) The return on equity measures earnings before interest and taxes.
10) Buying a bond with an option to sell the bond back to the firm at par is more
speculative than buying a bond that lacks this feature.
11) As the price of a stock rises, the time premium paid for an option to buy stock
increases.