"Equity Investments":Advantages of convertible preferred stock

下載正保會計網校APP 訂閱最新報考消息

來源: 正保會計網校編輯：小鞠橘桔 2020/12/09 14:46:36　字體：大小

選課中心

多樣班次滿足需求

選課中心

資料專區(qū)

干貨資料助力備考

資料專區(qū)

報考指南

報考條件一鍵了解

報考指南

學習是一個不斷積累的過程，每天學習一點，每天進步一點！為了幫助大家更高效地備考2021年CFA考試，正保會計網校每日為大家上新CFA習題供大家練習。讓網校與您一起高效備考2021年CFA考試，夢想成真！

Questions 1:

A trader seeking to sell a very large block of stock for her client will most likely execute the trade in a(n):

A、 quote-driven market.

B、 order-driven market.

C、 brokered market.

Questions 2:

The advantages to an investor owning convertible preference shares of a company most likely include:

A、 less price volatility than the underlying common shares.

B、 an opportunity to receive additional dividends if the company’s profits exceed a pre-specified level.

C 、preference dividends that are fixed contractual obligations of the company.

View answer resolution

【Answer to question 1】C

【analysis】

C is correct. Instruments that are infrequently traded and expensive to carry as inventory (e.g., very large blocks of stock, real estate properties, fine art masterpieces, and liquor licenses) are executed in brokered markets. Organizing order-driven markets for such instruments is not sensible because too few traders would submit orders to them.

A is incorrect. In quote-driven markets (also called price-driven, dealer, or OTC markets) customers trade with dealers, and the instruments traded are mostly bonds, currencies, and spot commodities.

B is incorrect. An order-driven market follows an order matching system run by an exchange or a broker using rules to arrange trades submitted by traders.

【Answer to question 2】A

【analysis】

A is correct. Convertible preference shares tend to exhibit less price volatility than the underlying common shares because the dividend payments are known and more stable.

B is incorrect. An opportunity to receive additional dividend if the company’s profits exceed a pre-specified level is the benefit that accrues to the holders of participating preferred shares, not convertible preference shareholders.

C is incorrect. Preference dividends are fixed but, unlike interest payment on debt, they are not contractual obligations of the company.

成功=時間+方法，自制力是這個等式的保障。世上無天才，高手都是來自刻苦的練習。而人們經常只看到“牛人”閃耀的成績，其成績背后無比寂寞的勤奮。小編相信，每天都在勤奮練習，即使是一點點的進步，大家一定可以成為人人稱贊的“牛人”。

點擊了解更多CFA考試資訊>>