Investors Who Earn Larger Returns Because They Borrow Part of the Money

question 88

Multiple Choice

Investors who earn larger returns because they borrow part of the money needed to by a particular stock are using which of the following techniques?

• A) A call option
• B) Direct investing
• C) Buying on margin
• D) A put option
• E) Selling short

---

Definitions:

Yield To Maturity

The total return anticipated on a bond if the bond is held until its maturation date.

Zero-Coupon Bonds

Bonds that do not pay interest during their lifetime but are sold at a discount to their face value, which is paid at maturity.

Zero-Coupon Bonds

Bonds that do not pay periodic interest payments and are issued at a discount to their face value, maturing to its full face value.

Expected Interest Rate

The interest rate investors anticipate receiving on an investment over a specific period, taking into account the risk of the investment.