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List the following stocks and bonds in order from lowest default risk to highest default risk:

Bond in a stable foreign government
Preferred stock
Common stock

A. foreign government bond, common stock, preferred stock

B. foreign government bond, preferred stock, common stock

C. common stock, preferred stock, foreign government bond

D. preferred stock, common stock, foreign government bond

Respuesta :

Mindaka
You have a government bond when a government bond issues a direct obligation.
Common and preferred stock both represent the ownership of a corporation, but preferred stockholders are paid before common stockholders, both in good and bad times.

Therefore, from least to highest default risk we have a bond in a stable foreign government, preferred stock and then, common stock.

Hence, the correct answer is B. foreign government bond, preferred stock, common stock.

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