Question
1. Which of the following is NOT true about common stocks? a. Common stocks are associated with voting rights. b. Common stocks represent a portion
1. Which of the following is NOT true about common stocks?
a. Common stocks are associated with voting rights.
b. Common stocks represent a portion of ownership of a company.
c. Common stocks always pay a dividend.
d. Common stocks are generally very liquid.
e. Common stocks never mature.
2. Which of the following is true about preferred stocks?
a. Preferred stocks have characteristics of both equity and debt.
b. Preferred stocks are preferred investments by all investors.
c. If dividends are not paid for common stocks, investors can force a company into bankruptcy.
d. Preferred stocks mature once the par value is paid off with dividends.
e. Preferred stocks are associated with voting rights.
3. Which of the following is NOT true about bonds?
a. Bonds are I.O.U.s of companies.
b. Bonds have generally a par value of $1,000.
c. Bonds are essentially annuities.
d. The bond price fluctuates, because the yield-to-maturity and the payment amount fluctuate.
e. As the time to maturity decreases, so do interest rate risk, liquidity risk, and default risk.
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