order of the riskiest source of finance

You will have to tell me which question you are referring to, because it depends on the information in the question and also whether it is referring to the risk for the investor or the risk for the company.

The bank loan is considered the riskiest because it is secured by a floating charge on the current assets of the company. In the event of liquidation, the bank loan would have priority over the other sources of finance.

Loan notes are secured on non-current assets, making them less risky than the bank loan.

Redeemable preference shares carry less risk than loan notes as they have a higher priority in the event of liquidation.

Ordinary shares are considered the least risky as they have the lowest priority in terms of repayment.

Apologies

To an investor

Redeemable preference shares are considered riskier than other sources of finance because they have a fixed dividend payment and a preferential right to receive a return of capital in the event of liquidation. However, they do not have voting rights and are subordinate to debt holders.

Bank loans are secured by a floating charge on the current assets of the company, which provides some security to the lender. However, they still carry a higher risk compared to loan notes and ordinary shares.

Loan notes are secured on non-current assets of Par Co, which provides a higher level of security to the lender compared to bank loans. They are considered less risky than bank loans but still riskier than ordinary shares.

Ordinary shares represent the highest level of risk to investors as they have no fixed dividend payments and are the last to be paid in the event of liquidation. Shareholders bear the highest risk but also have the potential for higher returns through capital appreciation and dividends.