A creditor of a corporation holds
A)bonds sold by the corporation.If the corporation experiences financial difficulties stock holders are paid before bond holders.
B)bonds sold by the corporation.If the corporation experiences financial difficulties bond holders are paid before stock holders.
C)stocks sold by the corporation.If the corporation experiences financial difficulties stock holders are paid before bond holders.
D)stocks sold by the corporation.If the corporation experiences financial difficulties bond holders are paid before stock holders.

Question

Quizplus · Accepted Answer

Bond holders have a higher priority of receiving payments in the event of financial difficulties or bankruptcy compared to stock holders. This is because bonds are a form of debt and the bond holder is essentially a lender to the corporation. Stock holders, on the other hand, are owners of the corporation and have a lower priority in receiving payments.

A Creditor of a Corporation Holds