Different Securities Issued by the Same Company Have Different Levels

question 102

Multiple Choice

Different securities issued by the same company have different levels of risk so that:

• A)equity (stock)has the highest risk, debt (bonds)the lowest, and preferred stock is in between.
• B)equity (stock)has the lowest risk, debt (bonds)the highest, and preferred stock is in between.
• C)Preferred stock has the highest risk because it's an unusual security that doesn't interest many investors, equity (stock)and debt (bonds)are about the same.
• D)debt is the riskiest security because companies often default on bonds before failing entirely; preferred stock is a little safer than common stock, that's why it's called preferred.

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Definitions:

Ozone

Triatomic oxygen (O3); an oxygen molecule consisting of three bonded oxygen atoms. The ozone layer in the Earth’s stratosphere helps protect the atmosphere from harmful solar ultraviolet radiation.

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Chlorofluorocarbons, a class of chemicals used in refrigerants and aerosol propellants, known to contribute to ozone layer depletion.

Upper Atmosphere

The region of Earth's atmosphere that is above the troposphere, including the stratosphere, mesosphere, thermosphere, and exosphere.

A/C Circuit

A closed path designed for the flow of electrical current to operate air conditioning systems, including components such as compressors, motors, and capacitors.