Which of the Following Securities Has a Purely Residual Claim

question 14

Multiple Choice

Which of the following securities has a purely residual claim against a firm's cash flows?

• A) preferred stock
• B) callable bonds
• C) common stock
• D) non-callable bonds
• E) None of the above.

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Definitions:

Par Value

A terminology indicating the official value of a security as outlined in the document at the time of its issue.

Dividend

A distribution of earnings given by a company to its stockholders, typically from its profits.

Par Value

The face value of a bond or stock as stated by the issuing company, often the minimum amount the security can be sold for.

Stockholders' Equity

The value of a company divided among its shareholders, often represented as the difference between assets and liabilities.