The price movements of low rated preferred stocks are most closely related to the price movements of
A) common stock.
B) treasury bills.
C) speculative corporate bonds.
D) investment grade corporate bonds.

Question

Quizplus · Accepted Answer

Low rated preferred stocks are more similar in risk characteristics to common stock than to any other option listed. They have lower credit ratings and are considered riskier investments, which means their price movements are more closely tied to the performance of the company and the broader stock market. Treasury bills are low-risk, short-term debt securities and have little to no correlation with preferred stocks. While speculative corporate bonds are higher risk than investment grade, they are still considered a more stable investment than low rated preferred stocks. Investment grade corporate bonds are typically lower risk and have a lower correlation with preferred stocks.

The Price Movements of Low Rated Preferred Stocks Are Most