Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Introduction to Investments in Securities

Financial Accounting

7. Receivables and Investments

Introduction to Investments in Securities

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Multiple Choice

Sarah recently received a $500{,}000 lump sum and wants to invest in securities. Which of the following would be considered an equity security?

Common stock of a corporation

Corporate bond

Treasury bill

Certificate of deposit (CD)

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Verified step by step guidance

Understand the concept of equity security: Equity securities represent ownership in a company, typically in the form of common stock or preferred stock. Holders of equity securities have a claim on the company's assets and earnings.

Review the options provided: Common stock of a corporation, Corporate bond, Treasury bill, and Certificate of deposit (CD).

Identify the characteristics of each option: Common stock represents ownership in a corporation, making it an equity security. Corporate bonds, Treasury bills, and CDs are debt instruments, meaning they represent loans made by investors to entities and are not equity securities.

Focus on the correct answer: Since equity securities represent ownership, the correct answer is 'Common stock of a corporation.'

Conclude the reasoning: Common stock is the only option that fits the definition of an equity security, as it provides ownership rights in a corporation, unlike the other options which are debt instruments.