1. Hybrid securities are quite susceptible to being reclassified as stock. Which of the following might be a characteristic of a hybrid security?
A. A maturity date that is reasonably close in time B. Interest payable regardless of the corporation's income C. Not subordinated to debt of general creditors D. The securities are convertible into common stock
2. The risk free rate today is 5% with inflation expectations running at 3%. If inflation expectations in the future fall to 2%, what should be the new risk free rate?
A-7%
B-3%
C-4%
D-5%