Which of the following is not true regarding specific bond provisions?
A)Firms might issue bonds based only on their credit worthiness as an entity.
B)Particular collateral might back up bonds issued by a firm.
C)Unsecured borrowing might carry senior rights or subordinated rights in the event of bankruptcy.
D)Senior debt holders have a higher priority for payment in the event of bankruptcy than subordinated (junior) unsecured lenders.
E)Common stockholders have a higher priority than unsecured bondholders for payment in the event of bankruptcy.

Question

Quizplus · Accepted Answer

Common stockholders have the lowest priority for payment in the event of bankruptcy. In contrast, unsecured bondholders have a higher priority than common stockholders.

Which of the Following Is Not True Regarding Specific Bond