Quiz AFM 121 sec 04 with answers

Quiz AFM 121 sec 04 with answers - Quiz #1 January 19th,...

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Quiz #1 January 19 th , 2012 AFM 121 Section 4 Andrew Ecclestone, CFA Name:_____________________ Student #:__________________ Question Score 1 2 3 Total Question 1 (5 marks) a) What are the primary characteristics of Equity Securities? Typically valid for the lifespan of the firm, no fixed term Payments in the form of dividends are not required and are made at the discretion of the firm Dividend payments are not tax deductible and are made from the post-tax operating profits of the firm Represents ownership of the firm and infers control to the holder
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b) What would be the advantages of purchasing a preferred share in comparison to a common share? The dividend of preferred stock is typically fixed at some point in time In the event of bankruptcy the preferred stock typically have a face value which is paid before distribution to common stock holders Question 2 (2 marks) a) What would you expect to happen to the value of a corporate bond issued by an insurance Company with a 5% coupon and a three year maturity, that is currently trading in the
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Quiz AFM 121 sec 04 with answers - Quiz #1 January 19th,...

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