Which of the Following Typically Employ(s) Significant Amounts of Leverage

question 35

Multiple Choice

Which of the following typically employ(s) significant amounts of leverage?
I. Hedge funds
II. Equity mutual funds
III. Money market funds
IV. Income mutual funds

• A) I only
• B) I and II only
• C) III and IV only
• D) I, II, and III only

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Definitions:

Fair Market Price

The price that a willing buyer and a willing seller agree upon, assuming both parties have reasonable knowledge of the item's relevance and are under no pressure to buy or sell.

Loss On Redemption

The loss incurred when a debt obligation or security is redeemed before its maturity date at a value less than the original purchase price or par value.

Carrying Amount

The balance of the bonds payable account (face amount of the bonds) less any unamortized discount or plus any unamortized premium.

Unamortized Discount

The portion of a bond's face value that has not yet been expensed as interest over time to reflect the bond being issued below its par value.