- CFA Exams
- CFA Level I Exam
- Topic 5. Equity Investments
- Learning Module 1. Market Organization and Structure
- Subject 2. Assets and Contracts
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 a stock, only the option to buy the stock. It is a type of option and does not yield a fixed income.
User Contributed Comments 4
| User | Comment |
|---|---|
| johntan1979 | Warrants are classified under "equities". |
| gill15 | So is preferred stock but I guess becasue for valuation purposes PS is treated as Fixed income securities when dividends are clearly paid....how do we know its clearly paid? |
| Logaritmus | Investopedia tells us that Preferred stock is equity, but usually has a fixed dividend payouts so it is fixed income security for its owner and we may treat it as a fixed-income obligation. |
| joeclark | PS is normally a debt instrument (technically). F*ck investopedia. |