Question 1: Take the following list of securities and arrange them in order of their priority of claims:
Preferred stock Senior debenture
Subordinated debenture Senior secured debt
Common stock Junior secured debt
Question 2: What is the difference between the following yields: coupon rate, current yield, yield to maturity?
Question 3: How does the preemptive right protect stockholders from dilution?
Question 4: If common stockholders are the owners of the company, why do they have the last claim on assets and a residual claim on income?
Question 5: Preferred stock is often referred to as a hybrid security. What is meant by this term as applied to preferred stock?
Question 6: A small amount of preferred stock is participating. What would your reaction be if someone said common stock is also participating?