Question: You have been asked to classify a security as debt or equity and have been provided the following characteristics for the security: It requires fixed

You have been asked to classify a security as debt or equity and have been provided the following characteristics for the security: It requires fixed monthly payments that are tax

-

deductible, and it has an infinite life. Its claims on the cash flows of the firm, during operation, and on the assets, if the firm goes bankrupt, come after all debtholders' claims

(

including unsecured debt

)

are met.

It is debt.

It is equity.

Cannot answer without more information.

You have been asked to classify a security as

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