Need blanks filled in: Less required margin to buy a stock means more________ an

Question

Need blanks filled in:

Less required margin to buy a stock means more________ and _______ return on equity.

Stocks are valued by discounting all future _____________.

As a relative measure of price sensitivity, or the change in the change of the price, only __________________ securities have this asymmetric characteristic. The two keys in valuing bonds are ____________ and __________ factor.

Short sales increasing is a _______________ indicator.

Selective memory describes________________?

Following a trend and others in financial decision making is behavior characteristic of __________ mentality.

Explanation / Answer

Question 1.

More trade and higher return on equity

Less required margin means a company has to pay lower proportion of money to buy stocks. This sort of facility is generally preferred by investors. Therefore, this increases volume of trade in the market.

Apart from that, the investors have to invest lower amount of money and they get full benefit of price change. This way they receive total dollar return by investing lower amount of money. This increases the return on equity for the investor.

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