The credit quality of a BBB bond compared to AAA bond would be? Higher Lower The
ID: 2721639 • Letter: T
Question
The credit quality of a BBB bond compared to AAA bond would be? Higher Lower The Same Likely higher Likely the same Preferred Stock is Stock without priority for dividends or any state/claim during a bankruptcy Stock with dividend priority over common stock; normally with a fixed dividend rate, sometimes with or without voting rights Stock that is triple tax free and immune to taxes Stock that is preferred by the investor to be taxed at double the limit Stock where you prefer to not receive dividends Triple Tax Free Municipal Bonds are: Subject to Federal, State and local Tax Not subject to Federal State and Local Tax Not subject to Federal Tax Not Subject to State and City Tax Only Subject to Triple Tax Flux Capacitors What is the Net Present Value of $100 in 1 year when the discount rate is 13%? 86.5 85.5 84.5 83.5 88.5 What is the Net Present Value of $100 in 2 years when the discount rate is 13 87.31 78.31 85.31 83.31 81.31Explanation / Answer
Answer for question 10
The credit quality of BB rating is always lower than credit quality of AAA.
Hence, option (B) is correct answer.
Answer for question 11
Preferred stock is type of stock with dividend priority over common stock, normally with the fixed dividend rate.
Hence, option (B) is correct answer.
Answer for question 12
Triple tax rate is subject to federal tax, State tax and local municipal tax rate.
Hence, option (A) is correct answer.
Answer for question 13
NPV of $100 in one year at discount rate of 13% is calculated below:
NPV = $100 / (1 + 13%)
= $88.50
Hence, Option (E) is correct answer.
Answer for question 14
NPV of $100 in one year at discount rate of 13% is calculated below:
NPV = $100 / (1 + 13%) ^2
= $78.31
Hence, Option (B) is correct answer.
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