Asked by Sherry Smith on Apr 27, 2024
Verified
_____ stock is an equity security that has some of the characteristics of debt.
A) Common
B) Equity
C) Preferred
D) Capital
Equity Security
A financial instrument representing ownership interest in a company, such as stocks.
Preferred Stock
A type of stock that gives holders priority for dividend payments over common stockholders and may carry other privileges, but usually does not have voting rights.
- Identify and differentiate between types of stock, particularly preferred and common stock.
Verified Answer
BP
Breanna PursellApr 30, 2024
Final Answer :
C
Explanation :
Preferred stock is often referred to as a hybrid security because it has features of both equity and debt. It represents an ownership stake in the issuing company but also guarantees a fixed dividend payment, similar to a bond. This fixed dividend payment makes preferred stock more similar to debt than common stock, which generally has no guaranteed dividend payment.
Learning Objectives
- Identify and differentiate between types of stock, particularly preferred and common stock.