What is true about the similarities and differences of debt and equity? Multiple Choice similarity: debt and equity are both sources of investment capital difference: debt is borrowed money which has a first claim to firm assets in bankruptcy while equity represents shareholder ownership in a firm and has less certainty as to its value as it has a residual claim (last claim) on assets of the firm. O similarity: debt and equity both increase the leverage of the firm difference: debt is borrowed money which has a definite payback period and amount while equity represents shareholder ownership in a firm and has less certainty as to its value O similarity: debt and equity both are guaranteed investments for investors difference: debt represents ownership by banks, while equity represents ownership by investors similarity: debt and equity both important to grow a company's assets difference: debt represents a liability of the firm while equity represents net assets of the firm