Which of the following is NOT debt security?

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BlackTom AI · Accepted Answer

The task asks: Which of the following is NOT debt security?
First, I need to restate what the question is asking: identify the item that is not a debt instrument among the given choices.
However, the provided data includes an answer field with only one item: 'a. Shares', and there are no actual answer options listed in 'answer_options'. This means I cannot perform a complete option-by-option analysis because the other choices are not visible. 
Despite the missing options, I can still reason about the concept involved.
- Conceptual basis: A debt security represents a borrowed amount that must be repaid by the issuer, often with periodic interest. Common debt securities include bonds, notes, and debentures. In contrast, shares (equities) represent ownership in a firm and confer potential dividends and voting rights, but do not obligate the issuer to repay a fixed amount in the way debt securities do. Therefore, in general terms, 'Shares' are NOT debt securities.
- If other options were present, a correct NOT debt security choice would be any instrument that does not involve a formal debt obligation of repayment (for example, equity shares). Options describing bonds, debentures, or notes would typically be debt securities and thus incorrect as NOT debt securities.
- Potential misconceptions to avoid: assuming that preferred stock is always a debt security—it is often treated as equity with a fixed dividend and is not a traditional debt instrument, but depending on classification, some exam contexts treat it differently. In standard classifications, common shares are clearly not debt, while most fixed-income instruments are debt securities.
In summary, given the conceptual distinction, 'Shares' are not debt securities, which aligns with the typical correct choice for NOT debt security. Nonetheless, the absence of the full list of answer options prevents a complete itemized critique of each alternative.

Which of the following is NOT debt security?

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Which of the following is NOT debt security?

View Explanation

Log in for full answers

Similar Questions

Which of the following is not a reason that a company would want to issue bonds (debt) instead of stock?

The incentives of equity investors and lenders are well aligned in that both care about improving firms’ long-term value.

________ is a contractual obligation to pay back the amount that has been borrowed. The borrower owes principal and interest to the lender. Whereas_____ provides ownership of the company to the shareholders.

________ is a contractual obligation to pay back the amount that has been borrowed. The borrower owes principal and interest to the lender. Whereas_____ provides ownership of the company to the shareholders.

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____ is a contractual obligation to pay back the amount that has been borrowed. The borrower owes principal and interest to the lender. Whereas_ provides ownership of the company to the shareholders.

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