Which of the following factors are considered when determining whether a security is debt or equity?
I.Permanence factor
II.Subordination factor
III.Objective factor
IV.Legal factor
V.Subjective factor
A)I and II
B)I, II, and III
C)I, II, and IV
D)I, II, IV, and V

Question

Quizplus · Accepted Answer

The determination of whether a security is debt or equity involves considering various factors, including the permanence of the investment (how permanent or long-term it is), the subordination of the security to other debts (whether it is ranked below other debts in case of liquidation), the legal rights of the security holders (what legal claims they have), and both objective (facts and figures) and subjective factors (intentions and expectations).

Which of the Following Factors Are Considered When Determining Whether