A stock which is hybrid and works as a cross between debt and common stock is considered as_______________?
Correct answer: D. Preferred stock
- A. Hybrid stock
- B. Common liabilities
- C. Debt liabilities
- D. Preferred stock
Explanation
Preferred stock is a hybrid security because it has equity ownership features but usually provides fixed dividends similar to the fixed return associated with debt. Common stock does not normally provide this fixed-priority feature.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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