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NEW QUESTION: 1
NEW QUESTION: 2
A case of leverage is:
A. borrowing at 6% and investing the funds at 10%
B. redeeming a convertible bond before maturity
C. selling common stock short and buying warrants for the equivalent number of shares followed by subscribing to the shares and covering the short
D. buying stock on the NYSE and later selling it the same day on the CBOE
Explanation: borrowing at 6% and investing the funds at 10%. Leverage is all about using money obtained at a lower cost than what can be earned deploying the funds elsewhere. It is unrelated to arbitrage.