Finra Series-6 Exam - Topic 6 Question 101 Discussion

Actual exam question for Finra's Series-6 exam

Question #: 101
Topic #: 6

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

AIII, II, IV, I

BII, III, I, IV

CIII, IV, II, I

DIV, III, II, I

Show Suggested Answer

Suggested Answer: C

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.

by Rozella at May 01, 2025, 05:17 AM

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Elli

2 months ago

Wait, are you sure about the order? Seems off to me.

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Bernadine

2 months ago

I thought preferred shareholders had higher priority than debenture holders?

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Mattie

2 months ago

Secured bondholders definitely come first!

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Lonna

3 months ago

Common shareholders are last, right? Makes sense.

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Loren

3 months ago

Yup, III, IV, II, I is the correct ranking!

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Chantay

3 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.

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Iraida

3 months ago

I feel like I might mix up the order of debenture holders and preferred shareholders. I hope I remember correctly!

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Elly

4 months ago

I remember practicing a similar question, and I think preferred shareholders come after secured bondholders but before common shareholders.

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Marylou

4 months ago

I think secured bondholders definitely have the highest priority, but I'm a bit unsure about where debenture holders fit in.

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Gilberto

4 months 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.

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Soledad

4 months 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.

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Evan

4 months 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.

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Lashawnda

5 months 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.

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Lamar

5 months 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.

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Margarita

8 months ago

I agree with Ty, secured bondholders should have the highest priority

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Moira

8 months ago

I'm not sure, but I think preferred shareholders should have higher priority

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Dona

8 months ago

I disagree, I believe the answer is D) IV, III, II, I

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Samira

9 months 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.

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Peggie

9 months ago

Haha, this question is a classic! I remember studying this in my finance class. The answer is definitely C, III, IV, II, I.

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Gennie

8 months ago

Yes, secured bondholders have the highest priority followed by debenture holders, preferred shareholders, and then common shareholders.

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Chara

8 months ago

I remember this from my finance class too. It's important to know the priority of claims in bankruptcy.

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King

8 months ago

I think the correct answer is C, III, IV, II, I.

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Pansy

9 months ago

The priority order is definitely III, IV, II, I. Secured bondholders are the top priority, and common shareholders are the lowest.

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Delsie

9 months 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.

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Brent

8 months ago

I believe the priority order is III, IV, II, I. It's important to double-check though.

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Brent

8 months ago

That's a good guess, but I think the correct order is II, III, I, IV.

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Keneth

9 months ago

I think the correct answer is C. Secured bondholders have the highest priority, followed by debenture holders, preferred shareholders, and common shareholders.

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