Which of the Following Statements Is FALSE

question 14

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:

Factors

Components or elements which collectively influence the outcome of processes, situations, or studies.

Perception

The process by which individuals select, organize, and interpret sensory information to understand their environment and experiences.

Recognized

Acknowledged or identified as having particular merit, status, or value within a specific context.

Perception

The process by which individuals interpret and organize sensory information to understand their environment.