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JAMB Commerce 1994 Question 7

Question 7

Business Units

Which of the following groups is paid first when a firm liquidates?

  1. A.Preference shareholders
  2. B.Debenture holders
  3. C.Ordinary shareholders
  4. D.Cumulative preference shareholders.
Show the answer and explanation

Answer: B (Debenture holders)

Explanation

Debenture holders are creditors of the company, so they are paid before any group of shareholders.