If a bond is junior or subordinated, it
A)has a higher priority status than specified creditors.
B)has been issued because the company is in default.
C)must give preference to senior creditors in the event of default.
D)is secondary to equity.

Question

Quizplus · Accepted Answer

If a bond is junior or subordinated, it must give preference to senior creditors in the event of default. This means that in the event of bankruptcy, senior creditors will be paid before junior or subordinated creditors.

If a Bond Is Junior or Subordinated, It