Question 49
Business OrganisationsBondholders are treated more favourably than shareholders because
- A.they are not liable for the company's losses
- B.they have a greater voice in electing board of directors
- C.they control the management
- D.they have a prior claim on the company's assets
- E.none of the above.
Show the answer and explanation
Answer: D (they have a prior claim on the company's assets)
Explanation
Bondholders lent money to the company, so they must be paid before shareholders receive anything, including when the company is wound up.