Which Class of Investors Do Not Have Claims on the Income

question 130

Multiple Choice

Which class of investors do not have claims on the income and assets of the firm prior to preferred shareholders?

• A)Bondholders
• B)Creditors
• C)Lenders such as banks
• D)Common shareholders

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Definitions:

Incremental

Pertaining to an increase or addition, especially in a series of small, regular steps.

Depreciation

A method of allocating the cost of a tangible asset over its useful life.

Amortization

The process of spreading out a loan into a series of fixed payments over time, covering both principal and interest.

Pure Endowment

An insurance policy where the insurer agrees to pay a specified sum of money at the end of a determined period on the condition that the insured is still alive.