In case of financial distress,the firm would pay its stockholders before paying its bondholders.

Name: In case of financial distress,the firm would pay its stockholders before paying its bondholders.
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In case of financial distress, a firm would prioritize paying its bondholders before paying its stockholders. This is because bondholders have a higher claim on the assets of the firm and are considered creditors, while stockholders are owners and have a lower priority in terms of receiving payments.

In Case of Financial Distress,the Firm Would Pay Its Stockholders