Exam 10: Bonds and Stocks: Characteristics and Valuations

Convertible preferred stock has a special provision that makes it possible to convert it to common stock of the corporation, generally at the stockholder's option.

Many callable bonds possess a call deferment period which is a specified period of time after the issue during which the bonds cannot be called.

A document which is administered by a trustee, and includes in great detail the various provisions of the loan agreement is called the:

The par value of a preferred stock is meaningful in that it is often used to determine the fixed annual dividend.

Most firms that issue dividends try to maintain a consistent _________________.

AT&T 10-year, $1,000 par value bond is selling at $1,158.91. Interest on this bond is paid semiannually. If the annual yield to maturity is 14%, what is the annual coupon rate of the AT&T bond?

These bonds have their coupons reset every two or three years to reflect the current interest rate environment and any changes in the firm's credit quality.

Corporations raise about half of their publicly held long-term debt funds by selling their bonds through public issues in the United States.

Bonds issued in the United States.

Most bonds pay coupon interest

DRIPs allow shareholders to purchase additional shares automatically with all or part of the investor's dividends.

__________________ allows stock to be held in the name of a brokerage house.

Which of the following types of stocks have the lowest risk to shareholders?

A bond's value is the same as its principal amount when the coupon rate is:

__________________ assess both the collateral and the ability of the issuer to make timely interest and principal payments.

You are considering buying a 10-year, $1,000 par value bond issued by IBM. The coupon rate is 8% annually, with interest being paid semiannually. If you expect to earn a 10% rate of return on this bond, what is the maximum price you should be willing to pay for this IBM bond?

Callable bonds can be redeemed prior to maturity by the firm.

With registered bonds, the issuer knows the names of the bondholders and the interest payments are sent directly to the bondholder.

The call price of a callable bond is typically equal to par value plus two years interest.

A bond that is selling in over its par value.