- CFA Exams
- CFA Level I Exam
- Topic 7. Derivatives
- Learning Module 1. Derivative Instrument and Derivative Market Features
- Subject 1. Derivative Features and Underlyings
CFA Practice Question
Which of the following securities is NOT a fixed-income obligation?
B. Collateral trust bonds
C. Warrants
D. Preferred stock
A. Convertible bonds
B. Collateral trust bonds
C. Warrants
D. Preferred stock
Correct Answer: C
A warrant does not constitute ownership of the stock, only the option to buy the stock. It is a type of option and does not yield a fixed income.
User Contributed Comments 2
| User | Comment |
|---|---|
| ankurwa10 | actually, warrants can be considered equity. there has been some legal debate on the actual classification of warrants, i.e. whether debt or equity, but given that it allows the conversion into equity, when exercised, should be equity for the sake of this question. |
| CJPerugini | ^ It doesn't matter how you classify the warrant because it does not offer fixed income. |