Stocks: Bond and Preferred Stock

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Question 1  
Subordinated debentures are more risky than unsubordinated debentures because the claims of subordinated debenture holders are less likely to be honored in the event of liquidation. Answer True False

1 points  
Question 2  
Junk bonds are also called high-yield bonds.
Answer True False

1 points  
Question 3  
The expected yield on junk bonds is lower than the yield on AAA-rated bonds because of the higher default risk associated with junk bonds. Answer True False

1 points  
Question 4  
In general, interest on bonds, like dividends on preferred stock, may be deferred until a later date at the discretion of management, making debt financing more appealing to corporate managers. Answer True False

1 points  
Question 5  
Restrictive provisions in bond indenture agreements are designed to protect bondholders and lessen the agency problems between bondholders and stockholders. Answer True False

1 points  
Question 6  
A company with a AAA bond rating will command a higher interest rate on its bonds than a company with a lesser BBB bond rating. Answer True False

1 points  
Question 7  
Other things held equal, a bond with a call provision is worth more to investors than a bond without a call provision. Answer True False

1 points  
Question 8  
Bonds generally have a maturity date while preferred stocks do not. Answer True False

1 points  
Question 9  
In an efficient market, the market value and intrinsic value of a security should be equal.  Answer True False

1 points  
Question 10  
Convertible bonds are debt securities that can be converted into a firm's stock at a prespecified price.  Answer True False

1 points  
Question 11  
Preferred stock is less risky than common stock, but more risky than debt.  Answer True False

1 points  
Question 12...
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