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- Preference shares have characteristics similar to bonds because it ______________ A. has a fixed monthly rate. B. has a fixed dividend amount. C. represents the ownership of the company. D. has no fixed dividend amount.Preferred stock is a special form of stock having a fixed periodic dividend that must be paid prior to payment of any interest to outstanding bonds. Is this true or false?If given the original value (par value) and market price (the price the bond sold for), how do youknow if the bond is being issued at a discount or a premium? 2. As an investor, would you want to buy a bond at a discount or premium? Explain the reasoningbehind your choice. 3. Explain how a company's Income Statement is affected by treasury stock transactions?
- Which of the following is correct? a. The YTM of a bond is its IRR b. Call premium rises as a bond nears its maturity date c. If the market and coupon rates are equal, a stock sells for its par value d. A bond indenture is a contract between bondholders and bond investorsWhich one of the following terms applies to a bond that can be exchanged for the issuing company's common stock in the future? Group of answer choices Callable Municipal Zero coupon ConvertibleA convertible bond can be converted into ________. a. common stock of a different company b. common stock of the company c. common stock and then converted into preferred stock d. preferred stock
- Preferred stock may have all of the following characteristics in common with bonds with the exception of Select one: A. a possible conversion option into common stock B. tax-deductible payments C. annuity payments D. the lack of voting rights E. a fixed liquidation valueA bond that pays interest forever and has no maturity date is a perpetual bond, also called a perpetuity or a consol. In what respect is a perpetual bond similar to (1) a no-growth common stock and (2) a share of preferred stock?1. A debenture is: Group of answer choices a secured bond a callable bond an unsecured bond a redeemable bond 2. A convertible bond Group of answer choices comes with a retractable top can be called in for early retirement can be turned in by the investor for early retirement can be swapped for other securities of the issue, typically stock 3. The coupon interest rate: Group of answer choices is the same as the effective interest rate is the same as the market interest rate is smaller than the stated interest rate. is the same as the stated interest rate 4. A bond has a face value of $10,000,000. It has a stated interest rate of 5% and a market interest rate of 6%. It sold for $900,000. It pays interest once a year on December 31. How much interest will the company pay each year? Group of answer choices $500,000 $450,000 $600,000 $540,000 5. A bond has a stated interest rate of 13% and a market…
- 1. A “buy-and-hold” investor purchases a fixed-rate bond at a discount and holds it until it matures. Which of the following least likely contributes to the investor’s total return, assuming all payments are made as scheduled? A. Capital gain B. Principal payment C. Reinvestment of coupon payments D. Coupon income1. Rank bonds, common stock, and preferred stock with regard to two factors the possibility of a substantial increase in value. Rank these same securities with regard to investors' legal claims for repayment on their investments. 2. Would a relatively high P/E ratio lead us to conclude that a stockBonds that can be exchanged for stock are called: Group of answer choices debenture bonds serial bonds convertible bonds callable bonds