1. Which statement is FALSE?
a. A convertible bond gives the bondholder the right to exchange their bonds for a preset number of shares of stock.
b. A warrant is a security that is often sold with bonds but that can be detached (bought and sold separately) from the bond
c. Most preferred stock is owned by individual investors due to the fixed dividends.
d. Arrearages are unpaid preferred dividends.
2. Which of the following statements regarding depreciation is/are correct?
-1- Real estate used for residential rental purposes is depreciated on a straight-line basis over 27½ years.
-2- Real estate used for commercial purposes is depreciated on a straight-line basis over 39 years.
-3- Both the value of the land and the value of the improvements on the land can be depreciated.
-4- A mid-year convention is used in the depreciation of real property.
A. 1 and 2.
B. 3 and 4.
C. 1, 2, and 3.
D. 1, 2, 3, and 4.