Unit 2

A bond would be considered speculative below which of the following Moody's ratings?

Baa

Your client is interested in investing in preferred stocks in an effort to receive dividend income. The client's target goal is a 6% current return on investment (ROI). If the RIF Series B preferred stock is paying a quarterly dividend of $0.53, your client's goal will be achieved if the RIF can be purchased at

35.33

Many fixed-income investors are looking to avoid loss of principal. Which of the following would likely have the lowest degree of exposure to credit risk? A) Baa-rated municipal revenue bond B) A-rated general obligation municipal bond C) Aa-rated corporate debenture D) Ba-rated corporate mortgage bond

C

gov't bonds quoting of bonds

1/32

During the past year, the market price of Kapco common stock has increased from $47 to $50 per share. Over that period, Kapco's earnings per share (EPS) have increased from $2.00 to $2.50 per share, and their dividend payout ratio has decreased from 50% to 40%. Based on this information, the current yield on Kapco common stock is

2%

Several years ago, an investor purchased an investment-grade bond with a 6% coupon. Today, that bond is priced to yield 4.6% to maturity in five years. If the bond is called at par in one year, the bond's yield will be A) less than 4.6%. B) more than 4.6%. C) the coupon rate of 6% because it is called at par value. D) 4.6%.

A

What rate of interest would a bank in England charge another British bank for a short-term loan?

SOFR

An investor purchased a bond with a 6% coupon rate exactly three months after its most recent interest payment. As a result, the buyer will pay $15 accrued interest. the buyer will receive $15 accrued interest. the seller will pay $15 accrued interest. the seller will receive $15 accrued interest.

1 and 4

Which of the following are characteristics of negotiable jumbo CDs? Issued in amounts of $100,000 to $1 million or more Typically pay interest on a monthly basis Always mature in one to two years with a prepayment penalty for early withdrawal Trade in the secondary market

1 and 4

The GHIJ Corporation has a 3% convertible debenture outstanding with a conversion price of $40. The bond's current market price is 126. The most probable reason for this is A) the current market price of the GHIJ common stock is approximately $35 per share. B) GHIJ's earnings have risen since the debenture was issued. C) interest rates have risen since the debenture was issued. D) the current market price of the GHIJ common stock is approximately $50 per share.

D