Chapter 15, Problem 2QS

To determine

Concept Introduction:

Debt and Equity securities $–$

Equity securities can be defined as the investment made in the ownership or the share capital of the company. The earnings that equity securities receive is dividend income which is the part of the income available to the investors or shareholders after all the obligations of the company has been met. Basically, the net income is divided in the form of dividends to equity shareholders. Example $–$ stock of a company.

Debt securities can be defined as the investment in debt instruments. Generally investors received interest income on the debt securities. Debt securities includes $–$ Treasury bill, bonds, commercial paper etc.

To Identify:

Investments as debt (D) securities or equity (E) securities.