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 these.

Question

Quizplus · Accepted Answer

A subordinated debenture is one that gives preference to the specified creditor in the event of default. This means that in case of bankruptcy or liquidation, the subordinated debenture holder will only receive payment after the designated creditors have been paid.

If a Debenture Is Subordinated,it