Even Though the Dividend Rate on an Adjustable-Rate Preferred Stock

question 111

Multiple Choice

Even though the dividend rate on an Adjustable-Rate Preferred Stock (ARPS) is floating to keep in line with interest rates, the instrument still suffers from risk such as:

• A)a thin market causing potential principal risk and liquidity concerns.
• B)the risk of downgrades from the narrow range of issuers.
• C)the impact of tax law changes, which may reduce the after-tax value of the instrument.
• D)All of the above.
• E)None of the above.

---

Definitions:

Statistical Procedures

Mathematical methods used to collect, analyze, interpret, and present data in a meaningful way.

fMRI

Functional Magnetic Resonance Imaging, a neuroimaging procedure that measures brain activity by detecting changes associated with blood flow.

Magnetic Resonance Imaging

A medical imaging technique used in radiology to form pictures of the anatomy and the physiological processes of the body, using strong magnetic fields and radio waves.

Radioactive Element

An element that spontaneously emits radiation as a result of the decay of its nucleus.