Which of the following is a hybrid form of equity that effectively pays dividends that are tax deductible and is considered Tier 1 capital?
A) Common stock
B) Preferred stock
C) Trust preferred stock
D) Leases
E) Trust subordinated debt

Question

Quizplus · Accepted Answer

Trust preferred stock is a hybrid form of equity that enables companies to pay interest to investors that is tax-deductible and qualify as Tier 1 capital. Common stock is the most basic form of equity, while preferred stock is a form of equity that pays a fixed dividend. Leases are a form of financing for assets, and trust subordinated debt is a type of debt that ranks below other debts in terms of priority for repayment.

Which of the Following Is a Hybrid Form of Equity