Which of the following are high risk stocks? a) Common stocks. b) Preferred stocks. c) Both involve the same amount of risk. d) It depends upon the market situation. | Homework.Study.com (2024)

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• Which of the following types of stocks have the lowest risk to shareholders? a. common stock b. cumulative preferred stock c. non-cumulative preferred stock d. callable preferred stock
• What is the difference between preferred and common stock? If you want higher expected returns, which would you purchase? Which is riskier; why?
• In what respect is preferred stock similar to bonds, and in what respect is it similar to common stock?
• Is preferred stock more like bonds or common stock? Explain.
• Which of the following is typically a feature of common stock? A. Common stocks have a maturity value. B. Common stocks may or may not pay dividends. C. Most common stocks are callable. D. Most common
• Multiple Choice Rank in ascending order (lowest to highest) the relative risk associated with holding the preferred stock, common stock, and bonds of a firm. A. preferred stock, bonds, common stock
• Which of the following statements is correct? a) In a bankruptcy, preferred shareholders come before bondholders. b) Compared to common stocks, preferred stock is less risky to the holders of the se
• Which of the following statements is most CORRECT concerning preferred stock? a. From the issuer's point of view, preferred stock is less risky than bonds. b. From the investor's point of view, preferred stock is riskier than common stock. c. Cumulativ
• What is the difference between preferred and common stock? Explain.
• Money Market Instruments include which of the following: (a) Common Stock (b) Preferred Stock (c) T-bonds (d) T-Bills
• Which of the following statements areTRUE? a. The "preferred" feature of preferred stock means that it normally will provide a higher expected return than will common stock. b. Preferred stock normal
• Would you rather own preferred stocks or common stocks? Why
• What are the differences between common stock and preferred stock? Explain your answers.
• Which of the following is a derivative asset? a. government bond b. corporate bond c. option contract d. common stock e. preferred stock
• Which of the following is a type of financial security issued by a corporation in need of capital? A. bonds B. preferred stock C. common stock D. all of the above
• Which of the following is not a primary source of capital to the firm? A. Assets B. Common stock C. Preferred stock D. Bonds
• Which of the following is not correct regarding preferred stock: A. Preferred stocks are considered to be safer investments than common stocks, B. Owners of preferred stock have first claim to a corporation's assets after creditors in a bankruptcy, C. Own
• Which of the following is not a primary source of capital to the firm? a) common stock b) preferred stock c) assets d) bonds
• What is the difference between book value per share of common stock, and market value per share? Why does this disparity occur?
• Which of the following is not a source of financing for a company? a. Bonds b. Common stock c. Preferred stock d. Treasury stock
• Which one of the following is a type of equity security that has a fixed dividend and a priority status over other equity securities? \\ A. Senior bond B. Debenture C. Warrant D. Common stock E. Preferred stock
• Discuss the differences between common stock and preferred stock.
• What is a possible consequence of all pension fund managers having the same investment strategy with regards to the proportions of their investments in preference shares, ordinary shares and debenture
• Which of the following would NOT be a part of a firm's capital structure? a. long-term bonds b. preferred stock c. short-term notes payable d. common stock
• A firm's capital structure consists of which of the following? a. Common stock b. Preferred stock c. Bonds d. All of the above
• Compare valuing preferred stock and common stock.
• Suppose you hold most of your wealth in stock. What kinds of options should you buy or sell in each of the following circ*mstances? a. You think the stock market will probably do well, but you worry about a crash. b. You want to get a steady return on yo
• Preferred stock valuation usually treats the preferred stock as a: a. capital asset. b. perpetuity. c. common stock. d. long-term bond.
• Which of the following statements is the most correct? a) Preferred stock generally has a higher component cost of capital to the firm than does common stock. b) By law in most states, all preferred
• Rank in ascending order (lowest to highest) the relative risk associated with holding the preferred stock, common stock and bonds of a firm: A)preferred stock, bonds, common stock B)bonds, common stock, preferred stock C)common stock, preferred stock, bon
• WhackAmOle has 4 million shares of common stock outstanding, 3.0 million shares of preferred stock outstanding, and 95,000 bonds. Assume the common shares are selling for $61 per share, the preferred
• WhackAmOle has 3 million shares of common stock outstanding, 2.0 million shares of preferred stock outstanding, and 75,000 bonds. Assume the common shares are selling for $62 per share, the preferred
• Which of the following is typically a feature of common stock? A) Most common stocks are cumulative. B) Most common stocks are callable. C) Common stocks have a maturity value. D) Common stocks ma
• Which stock seems to be a better buy? Consider the following two scenarios for the economy and the returns in each scenario for the market portfolio, an aggressive stock A, and a defensive stock D. |Scenario |Rate of Return: Market |Rate of Return: Aggre
• How might a VC/PE fund monitor its portfolio companies? What types of securities does a VC/PE fund like to obtain (common stock, preferred stock etc.)
• Capital markets do not include which of the following securities? A. Common stock B. Commercial paper C. Government bonds D. Preferred stock
• A. What are the advantages of investing in the common stock rather than the corporate bonds of a company? B. Compare the certainty of returns for a bond with those for a common stock. C. Draw a line
• a. What are the advantages of investing in the common stock rather than the corporate bonds of a company? b. Compare the certainty of returns for a bond with those for common stock. c. Draw a line g
• Preferred stock is similar to a bond in the following way: a. preferred stock always contains a maturity date. b. both investments provide a stated income stream. c. both contain a growth factor similar to common stock. d. both provide interest paymen
• Corporate bonds, T-bonds, and preferred stock are all examples of which of the following? a. Investment options for an investor seeking low-risk. b. Investment options for an investor seeking a high return for the high risk he or she is taking. c. Fixed-
• True or false? In terms of risk facing the investor, preferred stock is riskier than common stock but safer than debt.
• Which of the following involves a fixed payment? 1. bonds 2. preferred stock 3. common stock a. 1 and 3 b. only 1 c. 2 and 3 d. 1 and 2
• Which one of the following is a common term for the market consensus value of the required return on a stock? A. Dividend payout ratio B. Intrinsic value C. Market capitalization rate D. Plowback ratio.
• What should be the prices of the following preferred stocks if comparable securities yield 7 percent? Why are the valuations different? a. MN Inc., $8 preferred ($100 par) b. CH inc., $8 preferred ($100 par) with mandatory retirement after 20 years.
• Identify and discuss the various common stock valuation models. Discuss the difference between common and preferred stock.
• JackITs has 6.8 million shares of common stock outstanding, 2.8 million shares of preferred stock outstanding, and 38.00 thousand bonds. If the common shares are selling for $29.90 per share, the pref
• JackITs has 5.2 million shares of common stock outstanding, 1.2 million shares of preferred stock outstanding, and 22.00 thousand bonds. If the common shares are selling for $28.20 per share, the pref
• JackITs has 6.9 million shares of common stock outstanding, 2.9 million shares of preferred stock outstanding, and 39.00 thousand bonds. If the common shares are selling for $30.00 per share, the pref
• JackITs has 6.6 million shares of common stock outstanding, 2.6 million shares of preferred stock outstanding, and 36.00 thousand bonds. If the common shares are selling for $29.70 per share, the pref
• Define the following term associated with common stock: Treasury stock.
• Which of the following statements about financial markets and securities are true? a) Most common stocks are traded over-the-counter, although the largest corporations usually have their shares trade
• Define the following term associated with common stock: Stock split.
• WhackAmOle has 2 million shares of common stock outstanding, 1.5 million shares of preferred stock outstanding, and 50,000 bonds. Assume the common shares are selling for $64 per share, the preferred shares are selling for $53.00 per share, and the bonds
• WhackAmOle has 4 million shares of common stock outstanding, 3.0 million shares of preferred stock outstanding, and 95,000 bonds. Assume the common shares are selling for $62 per share, the preferred shares are selling for $51.00 per share, and the bonds
• What should be the prices of the following preferred stocks if comparable securities yield 6 percent, 8 percent, and 10 percent? a) MN, Inc., $4 preferred ($100 par) b) CH, Inc., $4 preferred ($100 par with the additional requirement that the firm must re
• What should the prices of the following preferred stocks be if comparable securities yield 7 percent? Why are the valuations different? a) MN Inc., $8 preferred ($100 par) b) CH Inc., $8 preferred ($100 par) with mandatory retirement after 20 years.
• What is the difference between private equity issuances and publicly traded common stock?
• What is the usual pattern of cash flows for a share of preferred stock? How does the market determine the value of a share of preferred stock, given these promised cash flows?
• Which of the following does not fall into the category of equity? a. Notes b. Preferred stock c. Warrants d. Private equity
• The what of a mutual fund represents the price at which shares can be purchased from a mutual fund?
• Money market instruments include __________. a.) common stock b.) preferred stock c.) t-bonds d.) t-bills
• What is one factor that might cause an investor not to convert from preferred to common stock? A. An investor might not convert from preferred to common stock if the dividends they will receive on the common stock are equal to what they would receive on t
• Which of the following would not be considered a capital market security? a. a 20-year corporate bond. b. a common stock. c. a 6-month treasury bill. d. a mutual fund share.
• What should one do, invest in more stocks of less price or less stocks having higher price? Which is safe and returns high value?
• An open-end mutual fund has the following stocks: If there are 64,000 shares of the mutual fund, what is the NAV?
• Which one of the following statements concerning venture capital financing is correct? a. Venture capitalists desire shares of common stock but avoid preferred stock. b. Venture capital is relatively easy to obtain. c. Venture capitalists rarely assume ac
• What is the difference between becoming a common stock holder and a preferred stockholder?
• Which of the following statements is CORRECT? a. If an investor buys enough stocks, he or she can, through diversification, eliminate all of the diversifiable risk inherent in owning stocks. Therefore, if a portfolio contained all publicly traded stocks,
• According to empirical studies, firms tend to split their shares how, earning above market returns and investors who buy firms after stocks split earn what market returns?
• The market that is a zero-sum game is the: a. common stock. b. preferred stock. c. options. d. treasury bill.
• Which one of the following statements about common stock is true? A) Common stock can provide attractive capital appreciation opportunities. B) Dividends generally provide the greatest rate of return on common stocks. C) Common stocks generally have a
• Which of the following is an INCORRECT statement regarding common stock? A. The RMBCA encourages the concept of par value. B. Common stock has no preferences. C. Common stock is an equity security that represents the residual value of a corporation. D
• Identify all the following stocks as overpriced, underpriced or fairly valued. For all calculations assume a market risk premium of 5% and a risk-free rate of 3%. StockE(Ri) (%)Beta_i Stock classification (over, under or fairly valued) A 7.15 3 B 12.08
• Which of the following statements is most correct? a. One of the advantages to the firm associated with financing using preferred stock rather than common stock is that control of the firm is not diluted. b. Preferred stock provides steadier and more reli
• TellAll has 10 million shares of common stock outstanding, 20 million shares of preferred stock outstanding, and 100 thousand years. If the common shares are selling for $32 per share, the preferred s
• True or false? Preferred stock is traded in the money market, while common stock is traded in the capital market.
• 1. How does common stock differ from preferred stock? 2. What requirements must be met if a shareholder meeting is to be conducted remotely? 3. Under the Model Business Corporation Act, what types of
• Which of the following choices is in the correct order from less risk to more risk? A) Certificates of deposit, corporate bonds, mutual funds that invest in stock, common stock. B) Certificates of deposit, corporate bonds, common stock, mutual funds that
• Explain the differences between par value, book value, and market value per share of common stock.
• Convertible bonds are: A- considered equity on the balance sheet B- similar in risk to the company's common stock C- riskier than the company's common stock D- less risky than the company's common
• An open-end mutual fund has the following stocks: Stock ; Shares ; Stock Price ; A - 6,000 ; $98 ; B - 33,000 ; 19 ; C - 4,600 ; 89 ; D - 82,500 ; 12 ; Assume there are 50,000 shares of the mutual fun
• If a company has a capital structure of $100,000 common stock, $50,000 bonds, and $10,000 preferred stock, and the respective rates are 15% common stock, 3% bonds (after tax), and 4% preferred stock,
• JackITs has 5.3 million shares of common stock outstanding, 1.3 million shares of preferred stock outstanding, and 23.00 thousand bonds. If the common shares are selling for $28.30 per share, the preferred shares are selling for $13.80 per share, and the
• A firm has $4,000 in its common stock account and $10,000 in its paid-in capital account. The firm issued 1,000 shares of common stock. Required: What is the par value of the common stock?
• Use the following scenario analysis for stocks X and Y to answer the questions. | | Bear Market | Normal Market | Bull Market | Probability | 15.00% | 60.00% | 25.00% | Stock X | -10.00% | 7.00
• What are the common trading strategies used by institutions and hedge funds for trading index options?
• All of the following statements about common stock are correct EXCEPT: A) common stock is a variable income security. B) common stock prices fluctuate more than bonds. C) common stock is callable. D) common stockholders have preemptive rights
• Flotation costs are the highest on A. mutual funds and bonds. B. preferred stock. C. bonds. D. common stock.
• Define the following term associated with common stock: Book value.
• What is the relationship between par value, market value, and book value for the following? a. Long-term debt b. Preferred stock
• What is the relationship between par value, market value, and book value for the following? (i) Long-term debt (ii) Preferred stock
• OMG, Inc has 7 million shares of common stock, 5 million shares of preferred stock outstanding, and 4,000 bonds. Suppose the common shares are selling for $16 per share, the preferred shares are selli
• Define each of the following: (a) Preferred stock (b) Dividend (c) Market capitalization (d) Limited liability.
• What are stock warrants and call options? How do they differ?
• A stock market comprises 5,900 shares of stock A and 2,800 shares of stock B. Assume the share prices for stocks A and B are $20 and $30, respectively. What proportion of the market portfolio is comprised of stock A? A. -57.4% B. 58.4% C. $118,000 D. $84,
• A stock market comprises 4700 shares of stock A and 2300 shares of stock B. Assume the share prices for stocks A and B are $25 and $30, respectively. What proportion of the market portfolio is comprised of stock A? A) 63.0% B) 62.0% C) 61.3% D) 79%
• Other things held constant, the value of an option depends on the stock's price, the risk-free rate, and the what?
• You bought $5, 500 worth of stocks in a certain company. Rank the following scenarios in the order of your preference: a.The stock grows at 30% a year for the first 5 years, follow by 10% a year for the next 5 years. b.The stock grows at 10% a year fo
• Larry believes that he will benefit from investing in common stock shares rather than preferred. Which statement regarding his investment choice is appropriate? O He does not want to incur any unnec
• Assuming that other factors remain constant, is common or preferred stock riskier to hold?