Rank the risk of the following securities from lowest to highest.
A) I, II, III, IV
B) IV, III, II, I
C) I, II, IV, III
D) IV, I, II, III
I.Long-term unsecured debt
II.Convertible preferred shares
III.Common equity
IV.Bank loans

Question

Quizplus · Accepted Answer

Bank loans are typically the least risky due to their secured nature. Long-term unsecured debt is riskier than bank loans but less risky than equity. Convertible preferred shares have more risk than debt but less than common equity, which is the riskiest due to its residual claim on assets.

Rank the Risk of the Following Securities from Lowest to Highest