1. Which of the following statements about corporate bonds is true?
I. Payment of interest takes precedence over payment of dividends.
II. All bonds are treated equally if bankruptcy occurs.
III. Payment of cash dividends takes precedence over interest payments on corporate bonds.
IV. The duration of a short term bond should be higher than the duration of a longer term bond.
V. Interest paid to investors on corporate bonds is federal tax exempt.
I only
II and IV only
III and V only
I, III and IV only
I, II, and III
2. Mary Beth is considering an investment in wheat futures, which has a spot price of $3.65 per bushel. If the commodity's futures price rises:
I. the long position profits
II. the short position profits
III. the buyer of the contract profits
IV. the seller of the contract profits
V. Mary must take delivery of 10,000 bushels of wheat
I and III
I and IV
II and III
II and V