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:

WAN

Stands for Wide Area Network, a telecommunications network that extends over a large geographic area for the primary purpose of computer networking.

LAN

Local Area Network; a computer network that interconnects computers within a limited area such as a residence, school, or office building.

Universal Service

A principle that aims to provide all citizens access to essential telecommunications services at an affordable price.

Coaxial

A type of cable that is used for transmitting television signals, internet connectivity, and other data.