Which of the following is an equity security?Multiple ChoiceU.S. Treasury bonds.Corporate notes.Corporate bonds.Municipal bonds.Company common stock.
Question
Which of the following is an equity security?
- U.S. Treasury bonds
- Corporate notes
- Corporate bonds
- Municipal bonds
- Company common stock
Solution
The equity security among the options provided is "Company common stock."
Here's why:
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U.S. Treasury bonds, corporate notes, corporate bonds, and municipal bonds are all types of debt securities, not equity. When you purchase these, you are essentially lending money to the issuer in exchange for periodic interest payments and the return of the bond's face amount when it matures.
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On the other hand, company common stock is an equity security. When you purchase common stock, you are buying a share of ownership in the company. This often gives you voting rights at shareholders' meetings and the right to receive dividends, which are a portion of the company's profits distributed to shareholders.
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