International Finance And Treasury - Study Mode
[#601] If price at which stock is purchased exceeds market value then stock warrants will
Correct Answer
(A) be exercised
Explanation
Solution: If price at which stock is purchased exceeds market value then stock warrants will be exercised. A stock warrant represents the right to purchase a company's stock at a specific price and at a specific date. A stock warrant is issued directly by a company to an investor. Stock options are purchased when it is believed the price of a stock will go up or down.
[#602] To make promised payments, federal money can
Correct Answer
(D) both a and b
Explanation
Solution: To make promised payments, federal money can raise taxes and print money. Promised payment is an agreement between a borrower and a lender in which borrower states he or she will provide payment by a specific date.
[#603] Reason of default risk on municipal bonds is because of
Correct Answer
(A) economic recession
Explanation
Solution: Reason of default risk on municipal bonds is because of economic recession. Economic Recession Definition. Economic recession is a period of general economic decline and is typically accompanied by a drop in the stock market, an increase in unemployment, and a decline in the housing market. Generally, a recession is less severe than a depression.
[#604] Current market price is multiplied to conversion rate received on conversion to calculate
Correct Answer
(A) conversion value
Explanation
Solution: Current market price is multiplied to conversion rate received on conversion to calculate conversion value. The term conversion value refers to the financial worth of the securities obtained by exchanging a convertible security for its underlying assets.
[#605] Bonds rated lower than triple-B bonds by Standard and Poor's are considered as
Correct Answer
(C) junk bonds
Explanation
Solution: Bonds rated lower than triple-B bonds by Standard and Poor's are considered as junk bonds. Junk bonds are bonds that carry a higher risk of default than most bonds issued by corporations and governments.