Which of the following investment characteristics would be favorable to an investor? I Callable
II Convertible
III Cumulative dividends
IV Pledge of collateral
A)I, II and III are correct
B)II, III and IV are correct
C)I and III are correct
D)I, II, III and IV are all correct
E)I and II are correct

Question

Quizplus · Accepted Answer

II, III, and IV are favorable to an investor. Convertible securities offer the potential for capital appreciation, cumulative dividends ensure missed payments are eventually paid out, and a pledge of collateral provides security for the investment. Callable securities, however, can be less favorable as they allow the issuer to repurchase the security before maturity, potentially at an inopportune time for the investor.

Which of the Following Investment Characteristics Would Be Favorable to an Investor