Which One of the Following Will Generally Receive the Highest

question 15

Multiple Choice

Which one of the following will generally receive the highest priority in a bankruptcy liquidation,assuming the absolute priority rule is followed?

• A)employee wages
• B)bankruptcy administrative expenses
• C)claims by unsecured creditors
• D)contributions to employee superannuation plans
• E)government tax claims

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Definitions:

Compounded Monthly

Interest calculated monthly on the principal sum plus previously earned interest.

Equal Payments

Regularly scheduled payments of the same amount, common in loans and amortization plans.

Compounded Annually

Interest that is calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan, done once a year.

Compounded Monthly

This refers to the calculation of interest on the initial principal and the accumulated interest over previous periods on a monthly basis.