Which of the following is the correct order of securities based on risk and return? (From most risk-return to least risk-return.)
A) Common stock, subordinated debentures, secured debt, Treasury bills
B) Preferred stock, common stock, subordinated debentures, secured debt
C) Common stock, long-term government bonds, secured debt, subordinated debt
D) Common stock, secured debt, subordinated debentures, preferred stock

Question

Quizplus · Accepted Answer

Common stock typically offers the highest potential returns but also comes with the highest risk. Subordinated debentures are unsecured and rank below other, more senior debt securities in case of liquidation, making them riskier than secured debt, which is backed by collateral. Treasury bills, being short-term government securities, offer the lowest risk and return.

Which of the Following Is the Correct Order of Securities