Series 6 - Investment Company And Variable Contracts Products Representative Exam
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Which of the following are true about callable preferred stock?
Issuers are likely to call securities when rates are rising. Callable preferreds have a higher stated dividend than straight noncallable preferred stock
A
Issuers are likely to call securities when rates are rising. Callable preferreds have a higher stated dividend than straight noncallable preferred stock. The corporation usually pays a premium that exceeds the stock's par value at the call in return for call privileges
B
Callable preferreds have a higher stated dividend than straight noncallable preferred stock. The corporation usually pays a premium that exceeds the stock's par value at the call in return for call privileges
C
Callable preferreds have a higher stated dividend than straight noncallable preferred stock. The corporation usually pays a premium that exceeds the stock's par value at the call in return for call privileges. Issuers are likely to call the stock when rates are falling.
D
Explanations
Callable preferreds have a higher stated dividend than straight preferreds. For call rights, the company issuing the callables usually pays a premium exceeding the stock's par value. Issuers are likely to call when interest rates are declining.