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1.
In order for an inverse exchange-traded fund to provide several times an index's return, it must use leveraging.
True. Along with compounding, such a fund would use leverage to achieve its aim in a bear market.
2.
Merger arbitrage involves buying stocks that are acquisition targets and _______.
Shorting the stocks of the acquiring companies or a broad index of stocks. Merger arbitrage is a type of long-short strategy.
3.
Futures-based, long-commodity exchange-traded funds work best as what kind of strategy?
Tactical. The other terms refer to currency-oriented ETF strategies.
4.
What does a buy-write stock-index strategy do?
Sells call options on a stock index. A buy-write or covered-call writing strategy writes or sells call options on a stock index, such that if the call is exercised, it is "covered," and the cash-value of the index can be delivered to the holder of the option. The premium received from writing the calls provides some protection against losses on underlying stock index, but also caps the gains on the index.
5.
Price momentum, valuation, and carry are all examples of ________.
Long positions and short positions. These strategies use both long and short positions to expose themselves to currencies.
