If a debt is subordinated,it:
A)has a higher priority status than secured creditors.
B)is secondary to equity.
C)must give preference to the secured creditors in the event of default.
D)has been issued because the company is in default.
E)is treated as an equity security.

Question

Quizplus · Accepted Answer

When a debt is subordinated, it means that it is ranked lower in priority than other debts or creditors. In the event of default, the subordinated debt must give preference to the secured creditors. This means that the secured creditors will be paid first, and any remaining funds will go towards paying off the subordinated debt. Subordinated debt is not treated as an equity security and does not have a higher priority status than secured creditors.

If a Debt Is Subordinated,it