If a debenture is subordinated, it:
A)has a higher priority status than specified creditors.
B)is secondary to equity.
C)must give preference to the specified creditor in the event of default.
D)has been issued because the company is in default.
E)None of the above.

Question

Quizplus · Accepted Answer

A subordinated debenture is a type of debt that ranks below other debts in terms of claims on assets or earnings. In the event of default, subordinated debentures must give preference to specified creditors, meaning they are paid after other debts have been settled.

If a Debenture Is Subordinated, It