AI CS4 Why can I not manipulate placed images

I haven't used AI for quite some time... seem to have forgotten whatever I once knew.
Placing an image on an existing bit of artwork... the image is a *.png format rendition of an arabesque.
When I place it into my artwork I am not able to resize it.  As I recall, I should be able to resize, shrink, stretch etc.
I am selecting it with the arrow tool, it is outside any objects (not overlapped or whatever).
Shouldn't I be able to quickly and easily manipulate the image in just about any way I want?
Instead, when selected the images aquires a red box aournd it, and can only be moved around, not resized.

Jesseham wrote:
show/hide your bounding box.  cmd-shift-b or from the View menu, show bounding box.
Also you mean the solid (black) arrow right?
Thats the baby... thanks.  I must have inadvertently hid the b box.  Not used to working that way so was a bit lost.
And yes I meant the solid black arrow tool ... sorry.
Also to Steve: Thanks, and yes the direct tools do the job too. I found the `free transform' tool, but it was really that bounding box being hidden that threw me.

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