4. Preferred stock A) B) pays out dividends as a percentage of par value provide

Question

4. Preferred stock A) B) pays out dividends as a percentage of par value provides voting rights is converted to common stock has a lower priority than common stock D) 5. How do index funds keep their expense ratios low? their holdings in the same proportion as well-known indexes. B) They trade stocks, often for maximum gains C They hold less than 20 companies in the fund. D) They have a team of professionals watch for the best options so as to the fund's performance. 6. Junk bonds, or high-yield bonds A) have a guaranteed return B) are bad investments that should be avoided C) are investment-grade bonds D) are classified by bond rating agencies as BB, BA, or lower 7. The higher the rating on the bond, the A) higher the coupon rate to attract investors B) higher the interest rate the issuer has to pay C) lower the coupon rate neded to attract investors None of the choices are correct; the rating has no effect on the interest rate and does not rate the risk of a bond D) 8. Which of the following is a type of real estate investment option? A) Rental property B) REITs (real estate investment trusts)Rental property C) "Flipping" properties D) All options are correct

Explanation / Answer

4) Option [B] - Pays out dividends as a percentage of par value. 5) Option [B] - They maintain their holdings in the same proportion as well-known indexes. 6) Option [D] - Are classified by bond rating agencies as BB, BA or lower. 7) Option [C] - Lower the coupon rate needed to attract investors. 8) Option [D] - All options are correct.

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