1. Earlier this year, you purchased $5,000 worth of an Badger Biolabs preferred stock. At the same time, your sister purchased $5,000 of Badger Biolabs' senior debt with a 5% coupon at par. The stock was rated single B. Last week the company filed for bankruptcy. Which investment has a better chance of returning at least some of capital?

a.Your preferred stock investment

b.Your sister's Bond Investment

c.Both have equal probability of receiving the same amount

2.During the semester a large corporation in the S&P 500 Index announced a stock split. One objective of the stock split was to become eligible for inclusion in which of the following indexes?

A.SPX

B.None of the above

C.All of the above

D.DJI

E.SPW

3. Assume you own a 2-year US Treasury Note with a 5% coupon and a 7-year US Treasury Note with a 0% coupon. If market interest rates decrease by 100 basis points in the 2-year maturity and declined by only 75 basis points in the 7-year maturity, which bond would experience the smallest market value change?

A.5% US Treasury due in 2 years

B.0% US Treasury due in 7 years

C.Both would change by the same amount

D.Prices would not change since the coupons are fixed