Rank the following in order of priority in the event of bankruptcy:
I.Subordinated, secured debt
II.Subordinated, unsecured debt
III.Unsubordinated, secured debt
IV.Unsubordinated, unsecured debt
A)III, I, IV, II
B)IV, I, III, II
C)III, IV, I, II
D)IV, II, III, I

Question

Quizplus · Accepted Answer

In the event of bankruptcy, debts are prioritized based on their security and subordination status. Unsubordinated, secured debt (III) is paid first because it has the highest claim on assets. Subordinated, secured debt (I) comes next as it is secured but has a lower priority due to its subordination. Unsubordinated, unsecured debt (IV) follows, having a higher priority than subordinated debts due to its unsubordinated status, despite being unsecured. Finally, subordinated, unsecured debt (II) is paid last, being the lowest in priority due to both its unsecured and subordinated status.

Rank the Following in Order of Priority in the Event