A case of leverage is:
A)selling common stock short and buying warrants for the equivalent number of shares followed by subscribing to the shares and covering the short
B)borrowing at 6% and investing the funds at 10%
C)buying stock on the NYSE and later selling it the same day on the CBOE
D)redeeming a convertible bond before maturity

Question

Quizplus · Accepted Answer

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.

A Case of Leverage Is