Question 524 risk, expected and historical returns, bankruptcy or insolvency, capital structure, corporate financial decision theory, limited liability
Which of the following statements is NOT correct?
(a) Stocks are higher risk investments than debt.
(b) Stocks have higher expected returns than debt.
(c) Firms' past realised stock returns are always higher than their past realised debt returns.
(d) In the event of bankruptcy, stock holders are paid after debt holders are fully paid.
(e) Stock holders have a residual claim on the firm's assets.