Which of the following securities has a purely fixed claim against a firm's cash flows?
A) bonds
B) options
C) common stock
D) None of the above.

Question

Quizplus · Accepted Answer

Bonds have a fixed claim against a firm's cash flows as they represent a loan given to the company. The bondholder receives regular interest payments and at maturity, the principal amount is repaid. Options and common stock do not have a fixed claim against a firm's cash flows as their value is dependent on the underlying assets and the future performance of the company.

Which of the Following Securities Has a Purely Fixed Claim