Under IFRS, Which of the Following Statements Is True

question 5

Multiple Choice

Under IFRS, which of the following statements is true?

• A)Preferred shares must be classified as debt.
• B)Preferred shares must be classified as equity.
• C)Preferred shares can be classified as debt or equity depending on the rights attached to them.
• D)Preferred shares can be classified as debt or equity at the option of the issuing company.

---

Definitions:

Beta

A measure of a stock's volatility in relation to the overall market; a beta greater than 1 indicates higher risk and potential return, while a beta less than 1 implies less risk and return.

Cost of Debt

The effective rate that a company pays on its current debt, including loans, bonds, and any other form of debt.

Cost of Equity

The theoretical earnings paid by a business to its equity holders as compensation for the risk they take by investing.

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, often paying fixed dividends.