Which of the following securities has a purely fixed claim against a firm's cash flows?
A) preferred stock
B) options
C) common stock
D) bonds
E) None of the above.

Question

Quizplus · Accepted Answer

Bonds have a purely fixed claim against a firm's cash flows, as they offer a predetermined interest payment and repayment of principal amount at maturity. Preferred stock may have a fixed dividend, but it is not a guaranteed claim against a firm's cash flows, while common stock and options have variable claims depending on the firm's performance.

Which of the Following Securities Has a Purely Fixed Claim