Company a Issues Preference Shares to Company B, the Terms

question 4

Multiple Choice

Company A issues preference shares to Company B, the terms of which entitle party B to redeem the preference shares for cash if Company A's revenues fall below a specified level. From Company A's perspective the preference shares are:

• A) an equity instrument
• B) a financial liability
• C) a compound financial instrument
• D) a financial asset

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Definitions:

IDDR Framework

A structured approach for disaster risk reduction that emphasizes the phases of Identification, Detection, Decision, and Response.

Ethical Considerations

The process of evaluating decisions and actions based on moral values and principles.

Profit Maximization

A strategic goal of businesses to achieve the highest possible profit through revenue generation and cost management.

Business Decision

A choice or judgement made as part of managing a company, affecting its direction, operations, and strategy.