We obtain, using transfer-matrix methods, the distribution function P(R) of the end-to-end distance, the loop formation probability, and force-extension relations in a model for short double-stranded DNA molecules. Accounting for the appearance of "bubbles," localized regions of enhanced flexibility associated with the opening of a few base pairs of double-stranded DNA in thermal equilibrium, leads to dramatic changes in P(R) and unusual force-extension curves. An analytic formula for the loop formation probability in the presence of bubbles is proposed. For short heterogeneous chains, we demonstrate a strong dependence of loop formation probabilities on sequence.