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3) sir I’ve written in my notes: “Highest to lowest risk:”
1)ordinary shares
2)preference shares
3)trade payables
4)secured loans
I dont understand about trade payables? whats that? Question 1)is it souce of finance? question 2)Why is it riskier than preference shares…I don’t know why you have written that in your notes!!!
Payables are a source of finance in that by delaying payment we need to borrow less money.
However they are not riskier than preference shares (and you have not shown them in your list as being riskier – you have shown them as less risky!!!). In fact they are the least risky of all – they must be paid before anybody else gets anything!
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