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Fill in the blanks. A corporation issues two classes of equity shares, preferred shares and common...

Fill in the blanks. A corporation issues two classes of equity shares, preferred shares and common shares. The preferred shares have priority on dividends and distribution on liquidation over the common shares. Therefore, these two classes of shares are not ________ ________.

The answer would be two separate words.

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Answer #1

Solution: debt instrument

Explanation: The preference shares are categorised to be the hybrid instrument as they are quasi-equity and quasi-debt. The equity investors would be the owners in the stock while debt investors are lenders to the issuer.

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