Which of the Following Statements Is False

question 25

Multiple Choice

Which of the following statements is false?

• A) In the event of default, the assets not pledged as collateral for outstanding bonds cannot be used to pay off the holders of subordinated debentures until all more senior debt has been paid off.
• B) Because more than one debenture might be outstanding, the bondholder's priority in claiming assets in the event of default, known as the bond's seniority, is important.
• C) When a firm conducts a subsequent debenture issue that has lower priority than its outstanding debt, the new debt is known as a subordinated debenture.
• D) Most debenture issues contain clauses restricting the company from issuing new debt with equal or lower priority than existing debt.

---

Definitions:

Product Life Cycle

A model that describes the stages a product goes through from its introduction to the marketplace until its decline and eventual withdrawal. These stages typically include introduction, growth, maturity, and decline.

Promotional Mix

The blend of different marketing strategies (advertising, sales promotion, public relations, personal selling, and direct marketing) used to achieve marketing goals.

Decline

A decrease in the importance, quality, or performance of something, often observed in product life cycles or economic conditions.

Growth Stage

A phase in the lifecycle of a product or business characterized by rapid revenue growth and increasing market acceptance.