54. Nearly all preferred stock comes with the right to receive all past unpaid dividends before common shareholders can receive any dividends. This right is referred to as: a. the preference feature b. the liquidation preference c. the cumulative feature d. voting preference 66. In order to compare the yields on municipal and corporate bonds the investor must restate the yield of either the taxable corporate bond to an after tax basis or the municipal bond to a pretax equivalent because a. corporate bonds are tax free b. municipal bonds are tax free and investors must compare rates on an equal basis c. a municipal bond is typically safer than a taxable corporate bond d. such restatements are not necessary for most taxpayers 68. Which of the following best describes how corporations are taxed on dividend income? a. Like individuals, corporations are taxed on all dividends received. b. Seventy percent of dividend income received by corporations is tax exempt. c. Varying amounts of dividend income received by corporations are tax exempt, depending on the percent of the paying corporation that the receiving corporation owns. d. In order to avoid triple taxation of earnings, dividend income received by one corporation from another in which it owns stock is 100% tax exempt. ____ 69. The higher the rate of interest: a. the larger the present value of a future sum of money b. the smaller the future value of an amount invested today c. the smaller the present value of a future sum of money d. all of the above ____ 70. Effective annual rates decrease as ____ decrease: a. annual percentage rates b. number of compounding periods c. quoted rates d. All of the above ____ 71. The present value of an amount can be represented as a. PV = FVn[PVFk,n] b. PV = FVn[PVFAk,n] c. PV = FVn[1 / (1 + k)n] d. a and c 73. The present value of a future amount is a. that sum which if deposited today will grow into the future amount. b. referred to as the discounted value of the future amount. c. always smaller than the future amount, for positive interest rates. d. all of the above ____ 74. The present value of an annuity will be decreased by a. an decrease in the number of payments. b. a decrease in the discount rate. c. a decrease in the amount of the payment in each per period. d. a and c e. all of the above. 76. An annuity with $1,000 annual payments at the end of each year, with a 10% interest rate, is worth how much at the end of four years? a. $4,641.00 b. $3,169.87 c. $5,105.10 d. none of the above 78. Which of the following would increase risk to the bondholder? a. A call provision b. Change in bond rating from A to AAA c. Secured by specific assets d. Restrictive covenants ____ 79. If a bond is selling at par value, which of the following would be the same as its coupon rate: a. Current Yield b. Yield to Maturity c. Market Interest Rate d. Both b & c e. All of the above 81. Preemptive rights allow stockholders to: a. purchase additional shares of stock from the issuing company at a discount b. sell their shares of stock back to the issuing company at any time c. maintain their proportionate ownership of corporations d. purchase preferred stock that may not be available to non-shareholders e. all of the above are included in the preemptive rights of a stockholder ____ 82. In widely held companies, what percentage ownership is generally enough for effective control if no one else owns more that a few percent? a. 15%-25% b. 50.1% c. 30%-40% d. 5%-10% ____ 83. All of the following are characteristics of preferred stock that make it similar to bonds except: a. constant periodic payments b. ahead of common stock with respect to dividends c. no voting rights d. periodic payment is tax deductible to the paying company e. all of the above characteristics make preferred stock similar to bonds