Question 1

Convertible preferred stock has all of the following characteristics except:

Options :

A : a lower dividend rate than non-convertible preferred

B : a dilution of earnings if converted into common stock

C : a requirement for shareholders to always accept the call price when called

D : required dividend payments to shareholders before any dividends are paid to holders of common stock

Answer: C

Question 2

Bubba buys one XYZ September 50 call at $7 and sells one XYZ September 60 call at $3. At that time, XYZ stock is at $55. Bubba has no other stock positions. What is Bubba’s maximum possible profit?

Options :

A : $500

B : $600

C : $1,000

D : unlimited

Answer: B

Question 3

Which of the following municipal securities carries the full faith and credit of the US government for payment of interest and principal if the issuer’s funds are insufficient?

Options :

A : general obligation bonds issued municipalities

B : special tax bonds issued by municipalities

C : revenue bonds issued by municipal port authorities

D : new housing authority bonds issued by a public housing authority

Answer: D

Question 4

If the Federal Reserve wished to ease credit, which of the following steps would it take?

Options :

A : raise the discount rate

B : purchase securities in the open market

C : lower reserve requirements

D : both B and C

Answer: D

Question 5

Distribution from an IRA can begin at age 59½ and must begin by age:

Options :

A : 70½

B : 65

C : 68

D : whenever the individual is retired

Answer: A

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