Suppose a firm sets aside assets to protect particular investors. These assets are called
A)repurchased shares.
B)senior debt.
C)subordinated debt.
D)collateral.

Question

Quizplus · Accepted Answer

Collateral is a specific asset or property that is pledged to secure a loan or other obligation. In this case, the firm is setting aside assets as collateral to protect particular investors. Repurchased shares refer to shares that the company has bought back from its shareholders, senior debt is debt that has priority over other debt in the case of the company's bankruptcy, and subordinated debt is debt that has lower priority than other debt in the case of the company's bankruptcy. None of these options accurately describe the situation of a firm setting aside assets to protect particular investors.

Suppose a Firm Sets Aside Assets to Protect Particular Investors