Bondholders have a claim on a corporation's assets and earnings that comes before the claims of common and preferred shareholders.

Question

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Bondholders are considered creditors and have a higher priority claim on a corporation's assets and earnings compared to common and preferred shareholders. This means that in the event of bankruptcy or liquidation, bondholders would be paid back before any payments are made to shareholders.

Bondholders Have a Claim on a Corporation's Assets and Earnings