Question

Which of the following are considered equity securities?

I. Convertible debt.
II. Redeemable preferred stock.
III. Call or put options.
a. I and II only.
b. I and III only.
c. II only.
d. III only.

Answer 1

Convertible debt and redeemable preferred stock are considered equity securities.

Step-by-step explanation:

Equity securities are financial instruments that represent ownership in a company. They typically provide the holder with voting rights and the opportunity to receive dividends. Based on the options provided, the equity securities are:

1. Convertible debt can be considered an equity security because it gives the holder the right to convert the debt into common stock of the issuing company.
2. Redeemable preferred stock is considered an equity security as it represents ownership in the company and provides the holder with voting rights and the potential to receive dividends.
3. Call or put options are not considered equity securities. These options give the holder the right to buy or sell a particular underlying asset, such as stocks, but do not represent ownership in a company.

Therefore, the correct answer is a. I and II only as both convertible debt and redeemable preferred stock are considered equity securities.