The preferred stock is considered as hybrid security because it includes ___________?
Correct answer: D. both A and BGet Study Guides
- A. representation of ownership interest
- B. fixed periodic payment
- C. higher liquidity
- D. both A and BGet Study Guides
Explanation
Preferred stock is hybrid because it represents an ownership interest like common stock while normally providing a fixed periodic dividend like debt. Therefore, both ownership and fixed-payment features apply.
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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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