Do Preferred Shares Offer Companies a Tax Advantage?

June 30, 2024 No Comments

A: A preferred stock is a class of ownership in a corporation that provides a higher claim on its assets and earnings as compared to common stock. There is no direct tax advantage to the issuing of preferred shares when compared to other forms of financing such

How Are Bonds Rated?

June 30, 2024 No Comments

A: A bond rating is a grade given to a bond by various rating services that indicates its credit quality. It takes into consideration a bond issuer’s financial strength or its ability to pay a bond’s principal and interest in a timely fashion. Moody’s, Standard and

Are Bid Prices of T-Bills Higher Than the Ask?

June 30, 2024 No Comments

A: Typically, the ask price of a security should be higher than the bid price. This can be attributed to the expected behavior that an investor will not sell a security (asking price) for lower than the price they are willing to pay for it (bidding price). How Bid/Ask

Are Certificates of Deposit (CDs) a Type of Bond?

June 30, 2024 No Comments

A: There is a fair amount of overlap between certificates of deposit (CDs) and bonds — they are both fixed-income securities which you generally hold on to until maturity. Simply put, you put your money into a CD or bond for a set period, and you know exactly

Are high-yield bonds better investments than low-yield bonds?

June 30, 2024 No Comments

A: Most bonds typically make periodic payments, known as coupon payments, to the bondholder. A bond’s indenture, revealed when the purchaser buys the bond, will specify the the details of the coupon payments. Different companies will issue different bonds to raise financial capital, and the

Are money market accounts considered checking or savings?

June 30, 2024 No Comments

A: A: A money market account (MMA) is neither a checking account nor a savings account, though it does contain elements of both. Like a checking account, an MMA offers check-writing privileges, though they are limited to around three per month. Some MMAs also offer

Are U.S. banks authorized to issue bank guarantees or medium term notes (MTNs)?

June 30, 2024 No Comments

A: Bank guarantees and medium term notes (MTNs) are different types of instruments that serve different purposes for corporations. Bank guarantees are instruments issued by a bank or other lending institutions ensuring that the money owed by a debtor will be paid. In other words,

Calculate the total return of the municipal bond described below.

June 30, 2024 No Comments

A: Jane and Fabbio Salvatore have just discovered that a Fabulous Florence municipal bond will be offered to support a bridge development in Fabbio’s hometown in Florence, OH. They want to purchase the bond at $1,000, but end up buying the 10% bond at $1,020.

A corporate bond I own has just been called by the issuer. How can a company legally take away my bond? How do these call provisions work?

June 30, 2024 No Comments

A: Bond issues can contain what is referred to as a call provision, which is a right afforded to the issuing company enabling it to refund the bondholder the par value of his/her bond (perhaps including a small call premium) at the company’s discretion. Any

All Rights Reserved