Which of the following statements is true about investing in stocks and bonds?
A)Issuers of stocks can default on their stock obligations.
B)Investing in stocks involves less risk because the future payments are less uncertain.
C)In case of bankruptcy, bondholders get paid first ahead of stockholders.
D)Bankruptcy occurs when the issuing firm is unable to fulfill its stock obligations.

Question

Quizplus · Accepted Answer

In the event of bankruptcy, bondholders have a higher claim on assets than stockholders, meaning they are paid first. Stocks represent ownership and are riskier, as they are paid after all debts are settled.

Which of the Following Statements Is True About Investing in Stocks