Under Chapter 7, Creditors Are Paid in a Certain Order

question 16

Multiple Choice

Under Chapter 7, creditors are paid in a certain order of priority. The highest-priority class comprises claims for

• A)debts related to motor vehicles, household goods, and trade tools.
• B)domestic support.
• C)the debtor's equity in his or her residence.
• D)student loans.

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Definitions:

No-Par Stock

Refers to shares issued without a nominal or face value, where the price is determined by the market or the company's board.

Treasury Stock

Shares that were issued by a company and then repurchased, not considered when calculating dividends or earnings per share.

Par Value

A nominal or face value assigned to a security or stock, which may bear no relation to its market value.

Paid-In Capital

The sum of funds that a corporation has obtained from investors in return for stock shares.