When corporations default on their debt:
A) bondholders may receive the firm's assets.
B) bondholders will suffer a loss.
C) the Board of Directors is liable for the payments.
D) the corporation is forced to default on its stock also.

Question

Quizplus · Accepted Answer

When corporations default on their debt, the bondholders have a claim on the firm's assets and can potentially receive them as a way to recover some of their investment. However, this is not guaranteed and depends on the specific situation and the terms of the bond agreement.

When Corporations Default on Their Debt