QUESTION: 57

Qualitative factors might also cause the required yield to be higher or lower than that based solely on the quantitative ratio analysis. Whish of the following is NOT out of such quantitative factors?

The competitive environment in the industry
Depth and competence of management
Trends in diversification of revenue sources
Trends in diversification of strategies

Answer(s): D

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QUESTION: 58

Factors affecting the value of preferred stock are all of the following EXCEPT:

Stated dividend rate and the risk associated with payment of it
Cumulative versus noncumulative dividends
Lack of marketability discount
Redemption privilege

Answer(s): C

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QUESTION: 59

If a $1000 per share value of convertible bond is issued for $1000, and is convertible into 20 shares of issuer's common stock that pays no dividend, there will be no economic benefit in converting the debt to stock as long as the common stock is selling for :

Less than $50 per share
$50 per share
$more than $50 per share
Less than $25 per share

Answer(s): A

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QUESTION: 60

An interesting form of debt security, known as , allows the issuer to avoid paying cash to the debt holder for interest prior to the debt's maturity. The only cash payment from the debt issuer comes at maturity, when the debt's face value is repaid to security holder.

Callable bonds
Zero coupon debt
Convertible debt
Collateral provisions

Answer(s): B

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QUESTION: 57

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QUESTION: 59

QUESTION: 60