(I)Preferred stockholders hold a claim on assets that has priority over the claims of common stockholders.
(II)Bondholders hold a claim on assets that has priority over the claims of preferred stockholders.

Question

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In a company's capital structure, preferred stockholders have a higher claim on assets and earnings than common stockholders, but bondholders have the highest claim, above both preferred and common stockholders. This hierarchy is important in the event of a liquidation.

(I)Preferred Stockholders Hold a Claim on Assets That Has Priority