Detailed Answer
Answer (A) is correct. Common shareholders are the residual owners of a corporation; they stand last in order of priority during liquidation, but they have the right to receive distribution of excess profits. Preferred shareholders stand ahead of common shareholders in case
of liquidation, but their potential returns are capped by the board of directors. Income bonds, debentures, mortgage bonds, and U.S. Treasury bonds are all debt securities, meaning the issuer is legally obligated to redeem them. Because these returns are guaranteed, they are lower than those for equity investments. Income bonds pay a return only if the issuer is profitable, debentures are unsecured, mortgage bonds are secured by real property, and U.S. Treasury bonds are backed by the full faith and credit of the United States government.