Bondholders have priority claims over equity holders to a firm's assets and cash flows.

Name: Bondholders have priority claims over equity holders to a firm's assets and cash flows.
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Question

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Bondholders are considered creditors and have priority claims over equity holders, who are considered owners. In the event of a bankruptcy or liquidation, bondholders have the first claim to a firm's assets and cash flows before equity holders receive any distributions.

Bondholders Have Priority Claims Over Equity Holders to a Firm's