The correct answer is: B. preferred stock
Preferred stock is a type of equity security that has a higher claim on a company’s assets and earnings than common stock. Preferred stockholders are entitled to a fixed dividend, which is paid out before any dividends are paid to common stockholders. In the event of a company’s bankruptcy, preferred stockholders are paid out before common stockholders.
Common stock is a type of equity security that represents ownership in a company. Common stockholders have the right to vote on company matters and to receive dividends, if any are declared. However, common stockholders have a lower claim on a company’s assets and earnings than preferred stockholders.
Bonds are a type of debt security that represents a loan made by an investor to a company or government. Bondholders are entitled to receive interest payments on a regular basis, and the principal amount of the bond is repaid at maturity.
Equity is the value of a company that is owned by its shareholders. Equity is calculated by subtracting a company’s liabilities from its assets.
Common shares are shares of common stock.