If Huedepool Beer runs into financial difficulty, how are bondholders and shareholders paid?
A) Shareholders are paid before bondholders.
B) Shareholders are paid after bondholders.
C) Shareholders and bondholders are paid proportional shares of the company's assets.
D) Shareholders receive all the company's assets.

Question

Quizplus · Accepted Answer

Bondholders have priority over shareholders in payment in the case of financial difficulty. This is because bonds are considered a form of debt and have a contractual obligation to be paid back before shareholders, who are owners of the company and have a claim on the assets after all of the company's financial obligations have been met.

If Huedepool Beer Runs into Financial Difficulty, How Are Bondholders