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Rank the following entities with regard to the priority of their claims on a firm-from the highest priority to the lowest priority-in the event of bankruptcy.
i. common shareholders
ii. preferred shareholders
iii. secured bondholders
IV. debenture holders
Suggested Answer: C
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Choice C correctly ranks the entities with regard to the priority of their claims on the firm in the event of bankruptcy, from the highest priority to the lowest priority. Secured bondholders get paid first, then debenture (unsecured bond) holders, followed by preferred shareholders. Common shareholders come in last.
31 comments · newest first
EL
Elli
10 months ago
Wait, are you sure about the order? Seems off to me.
BE
Bernadine
11 months ago
I thought preferred shareholders had higher priority than debenture holders?
MA
Mattie
11 months ago
Secured bondholders definitely come first!
LO
Lonna
11 months ago
Common shareholders are last, right? Makes sense.
LO
Loren
11 months ago
Yup, III, IV, II, I is the correct ranking!
CH
Chantay
11 months ago
I’m pretty confident that it’s secured bondholders first, but I can’t recall if debenture holders or preferred shareholders come next.
IR
Iraida
12 months ago
I feel like I might mix up the order of debenture holders and preferred shareholders. I hope I remember correctly!
EL
Elly
12 months ago
I remember practicing a similar question, and I think preferred shareholders come after secured bondholders but before common shareholders.
MA
Marylou
1 year ago
I think secured bondholders definitely have the highest priority, but I'm a bit unsure about where debenture holders fit in.
GI
Gilberto
1 year ago
This is a tricky one, but I think I can work through it. Let me review the key principles around bankruptcy claims and the hierarchy of creditors. I'll make sure I have the right understanding before submitting my answer.
SO
Soledad
1 year ago
I'm pretty confident I know the right answer. Secured bondholders have the highest priority, then preferred shareholders, debenture holders, and finally common shareholders. This is the order we covered in class, so I feel good about selecting the correct option.
EV
Evan
1 year ago
Hmm, I'm a bit confused on the order here. I know secured creditors have priority, but I'm not sure about the ranking between preferred shareholders, debenture holders, and common shareholders. I'll have to think this through carefully.
LA
Lashawnda
1 year ago
Okay, I think I've got this. Secured bondholders have the highest priority, followed by preferred shareholders, then debenture holders, and finally common shareholders. Let me double-check that.
LA
Lamar
1 year ago
This question seems straightforward, but I want to make sure I understand the priority order correctly. I'll review my notes on bankruptcy claims to refresh my memory.
MA
Margarita
1 year ago
I agree with Ty, secured bondholders should have the highest priority
MO
Moira
1 year ago
I'm not sure, but I think preferred shareholders should have higher priority
DO
Dona
1 year ago
I disagree, I believe the answer is D) IV, III, II, I
SA
Samira
1 year ago
Ah, the good old bankruptcy priority question. I bet the exam writer is trying to trick us with this one. I'm going with C, just to be safe.
PE
Peggie
1 year ago
Haha, this question is a classic! I remember studying this in my finance class. The answer is definitely C, III, IV, II, I.
GE
Gennie
1 year ago
Yes, secured bondholders have the highest priority followed by debenture holders, preferred shareholders, and then common shareholders.
CH
Chara
1 year ago
I remember this from my finance class too. It's important to know the priority of claims in bankruptcy.
KI
King
1 year ago
I think the correct answer is C, III, IV, II, I.
PA
Pansy
1 year ago
The priority order is definitely III, IV, II, I. Secured bondholders are the top priority, and common shareholders are the lowest.
DE
Delsie
1 year ago
Hmm, I'm not sure about that. I think the order might be III, II, IV, I, but I'll have to double-check my notes.
BR
Brent
1 year ago
I believe the priority order is III, IV, II, I. It's important to double-check though.
BR
Brent
1 year ago
That's a good guess, but I think the correct order is II, III, I, IV.
KE
Keneth
1 year ago
I think the correct answer is C. Secured bondholders have the highest priority, followed by debenture holders, preferred shareholders, and common shareholders.
AL
Alyce
1 year ago
I believe common shareholders are at the bottom of the priority list.
RO
Royal
1 year ago
I think preferred shareholders should come before debenture holders.
SC
Scarlet
1 year ago
I agree with you, secured bondholders should have the highest priority.
TY
Ty
1 year ago
I think the answer is C) III, IV, II, I