________ is a stipulation in a long-term debt agreement that subsequent or less important creditors agree to wait until all claims of the ________ are satisfied before having their claims satisfied.
A) Subordination; common stockholders
B) Subordination; senior debt
C) The combination restriction; senior debt
D) The senior debt; common stockholders

Question

Quizplus · Accepted Answer

The concept described in the question is that of subordination, which means that certain creditors (subordinate creditors) agree to wait until the claims of other, more senior creditors are satisfied. Typically, this refers to long-term debt agreements, and senior debt refers to the debt held by the most important creditors, who have first priority in terms of repayment. Therefore, choice B is the correct answer, as it mentions subordination and senior debt, which are both important concepts in this context. The other choices are incorrect because they do not accurately describe this type of arrangement.

________ Is a Stipulation in a Long-Term Debt Agreement That