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NEW QUESTION: 1
Bubba buys a $4 convertible preferred with a $50 par value that is exchangeable for common stock at
47.50. If the preferred stock is trading at 52 and the common stock at 51, Bubba determines that the preferred stock is:
A. going to be called when the common stock price is $52
B. selling at a 4% premium over conversion value
C. overpriced and will quickly decline
D. underpriced and should rise quickly
Answer: D
Explanation:
Explanation/Reference:
Explanation: underpriced and should rise quickly. The parity price for the common stock is about $49.38 - determined as:50 / 47.50 = 1.053 52 / 1.053 = 49.38 Since the common stock is trading at 51, the preferred is underpriced.

NEW QUESTION: 2

A. Option B
B. Option A
C. Option C
D. Option D
Answer: D

NEW QUESTION: 3

A. Option B
B. Option C
C. Option A
D. Option D
Answer: C,D