In situation of bankruptcy, stock which is recorded above common stock and below debt account is_____________?
Correct answer: B. Preferred stock
- A. Debt liabilities
- B. Preferred stock
- C. Hybrid stock
- D. Common liabilities
Explanation
Preferred stock has priority over common stock in receiving assets during liquidation, but it ranks below debt holders. This intermediate position is why preferred stock is often viewed as having both debt-like and equity-like features.
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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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