A change in interest rates will have the most immediate impact upon:

A) preferred stock.

B) common stock.

C) ETFs.

D) REITs.

Answer: A) preferred stock.

Equity ownership of a corporation is split into two types which are commonly referred to as:

A) stocks and bonds.

B) preferred stocks and bonds.

C) common stocks and convertible bonds.

D) common stocks and preferred stocks.

Answer: D) common stocks and preferred stocks.

A similarity between common and preferred stock is:

A) the dividend is fixed.

B) they have an equal vote.

C) both are evidence of corporate indebtedness.

D) the dividend must be declared by the board of directors.

Answer: D) the dividend must be declared by the board of directors.

All of the following are features of preferred stock EXCEPT:

A) priority claim to assets at the dissolution of a corporation.

B) typically no voting rights.

C) fixed maturity.

D) fixed rate of return.

Answer: C) fixed maturity.

If interest rates are increasing and the market prices of bonds are decreasing, what happens to the value of straight preferred stock during this period?

A) Its value decreases.

B) Its value increases.

C) Its value remains the same.

D) Interest rates and the price of bonds have no impact on the value of stock.

Answer: A) Its value decreases.

When analyzing a preferred stock, an investment adviser would give the most credence to:

A) earnings per share.

B) book value per share.

C) the ability of the company to pay the stated dividend.

D) the company's short-term debt obligations.

Answer: C) the ability of the company to pay the stated dividend.