Series 65 Practice 5

MMY Corporation has convertible debentures that can be exchanged for shares of MMY common stock at a set price of $40. If MMY common stock is currently trading at $57, what is the parity price of the MMY’s convertible debentures?
$1,017
$1,425
$1,000
$1,765
Which of the following statements are true of bonds issued in bearer form?
They no longer exist
They are no longer issued in this manner
Interest coupons are detached from the bonds
Proof of ownership is required at maturity
What is true about a bond with an 8% coupon trading at a 10% YTM?
It is trading at a discount
The price of the bond went up
Interest rates have risen
The bond is trading at a premium
Which of the following bonds are trading at a premium?
8% coupon, 9.10 basis
8% coupon, 9.50 basis
8% coupon, 7.70 basis
8% coupon, 8.00 basis
All of the following statements are true concerning zero coupon bonds except:
Interest is received at maturity
Interest is taxed annually
Reinvestment risk is eliminated
Taxes paid do not raise the investor’s cost basis - taxes paid always increase cost basis
Which of the following represent money market securities?
ADR’s
Short-term equity instruments maturing in one year or less
Preferred stock
Commercial paper
Which of the following are associated with falling interest rates?
Bond prices rising
Bond prices falling
Coupon rates rising
Coupon rates falling
If a company is liquidated, interested parties will be paid in which order?
Preferred, secured, common, employees
Employees, secured, preferred, common
Secured, employees, preferred, common
Employees, preferred, secured, common
Which of the following investors are considered to have an equity position?
Owners of callable preferred stock
Owners of debentures
Owners of subordinated debentures
All of the above
All of the following investments come with a guarantee of interest and principal payment by the U.S. Treasury except:
T-bills
GNMA
T-bonds
Treasury receipts
Which of the following represent a benefit of owning fixed-income securities?
Inflation protection
Liquidation priority
Capital appreciation
Growth
Which of the following is probably the least significant risk of owning a municipal bond?
Inflation risk
Default risk
Interest rate risk
Reinvestment risk
Which of the following must be a closed-end fund?
NAV = $9.00, POP = $9.25
NAV = $9.00, POP = $9.00
NAV = $9.00, POP = $8.50
NAV = $9.00, POP - $9.10
The maximum sales charge for a mutual fund is
8.5%
9.0%
10%
5%
Which of the following statements are true concerning open- and closed-end funds?
open-end funds may invest in debt securities
closed-end funds may invest in debt securities
open-end funds may issue debt securities
closed-end funds may issue debt securities
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