Selling Lower-Rated Issues and Then Purchasing Higher-Rated Securities Is Considered

question 47

Multiple Choice

Selling lower-rated issues and then purchasing higher-rated securities is considered a/an

• A)amortization of intangible assets.
• B)purchasing power gains.
• C)flight to quality.
• D)quality smoothing.

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Definitions:

Par

The face value of a security as stated by its issuer, distinct from its market value.

Common Stock

A type of security that represents ownership in a corporation, with voting rights and potential for dividends.

Par Value

The stated value of a financial security, such as a bond or stock, as declared by the issuer.

Preferred Stock

A type of equity security that has a priority claim on a company's assets and earnings before common stock, usually with fixed dividends and no voting rights.