Which of the following statements is correct? a. Subordinated debt has less defa

Question

Which of the following statements is correct? a. Subordinated debt has less default risk than senior debt. b. Junior debt is debt that has been more recently issued, and in bankruptcy it is paid off after senior debt because the senior debt was issued first. c. A debenture is a secured bond that is backed by some or all of the firm's fixed assets. d. Mortgage bondholders would be paid before wages due and income taxes due in Chapter 7 bankruptcy procedure. e. Junk bonds typically provide a lower yield to maturity than investment-grade bonds.

Explanation / Answer

Answer- Only (d) is correct.

d. Mortgage bondholders would be paid before wages due and income taxes due in Chapter 7 bankruptcy procedure.

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