Which of the Following Financing Alternatives Has the Highest Preference

question 69

Multiple Choice

Which of the following financing alternatives has the highest preference of payment in a case where the company liquidates its assets?

• A)Common Stock.
• B)Preferred Stock.
• C)Bonds.
• D)They have equal preference.

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Definitions:

Efficiency Loss

Reductions in combined consumer and producer surplus caused by an underallocation or overallocation of resources to the production of a good or service. Also called deadweight loss.

Perfectly Inelastic

A situation where the demand or supply for a good or service remains unchanged regardless of changes in its price.

Excise Tax

Is a tax applied on the sale or production for sale of specific goods within a country.

Incidence

Refers to how the burden of a tax is distributed between buyers and sellers in the market.