Which of the Following Would Most Likely Be Considered the Safest

question 6

Multiple Choice

Which of the following would most likely be considered the safest investment?

• A) Corporate bond
• B) Certificate of deposit
• C) Ordinary share
• D) Cumulative preferred stock
• E) Preferred stock

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Definitions:

Treasury Stock

Shares that were issued and subsequently repurchased by the issuing company, reducing the amount of outstanding stock on the open market.

Consolidation Worksheet

A tool used in preparing consolidated financial statements, aiding in the combination of financial information from multiple entities within a corporate group.

Initial Value Method

A method used in accounting to record investments based on their acquisition costs without any subsequent change except for impairments.

Treasury Stock Approach

A method of calculating the effect of share options on diluted earnings per share by assuming treasury shares are bought at the average market price.