Which One of the Following Is the Most Junior in Terms

question 79

Multiple Choice

Which one of the following is the most junior in terms of its claim on earnings and assets?

• A) subordinated debenture
• B) mortgage bond
• C) collateral trust bond
• D) equipment trust certificate

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Definitions:

Expected Utility Function

A mathematical representation in economic theory that models preferences over risky choices or uncertain outcomes.

Utility Function

An economic model that describes how consumers rank different bundles of goods according to the levels of happiness or satisfaction they provide.

Risk Neutral

A term describing an individual or entity that does not prefer or avoid risk, implying indifference to the amount of risk associated with any investment.

Risk Averse

A characteristic of individuals who prefer to avoid risk and would rather choose an option with a lower but more certain return than an option with a higher but uncertain return.