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NEW QUESTION: 1
A. Option A
B. Option D
C. Option B
D. Option C
Answer: B
Explanation:
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NEW QUESTION: 2
Two bonds differ in their provisions for early retirement. Bond A is a 5-year serial bond. Bond B contains a sinking fund provision requiring the issuer to provide the trustee with sufficient funds to retire
2 0% of the original principal each year for 5 years. The sinking fund provision calls for the trustee to select the serial numbers of bonds to be retired by random assignment. Neither bond is callable.
I). The timing and size of bond A's promised payments are known with certainty.
II). There is a 20% chance that an investment position in bond B will be reversed after the first year.
III). The probability that an investment position in bond B will be reversed before maturity increases as time to maturity decreases.
A. I and II.
B. II and III.
C. I, II and III.
Answer: C
Explanation:
The indenture of a serial bond specifies the size and timing of promised payments. The sinking fund provision of the bond described in this problem adds uncertainty as to the number of cash flows to be received by the bond owner.
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E. Register filtered prospects.
Answer: C,D
NEW QUESTION: 4
A. Option A
B. Option B
C. Option C
D. Option D
Answer: C
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