10. Which of the following statements about a firms debt and equity is NOT correct?

a.

If a firm makes very high profits and cash flows, the debt holders are still only paid the interest and principal payments that theyre promised and no morE.For this reason, returns on debt have a maximum.

b.

In the event of bankruptcy, debt holders are paid in full before equity holders are paid anything.

c.

Bonds and loans usually have lower expected returns than shares because they have first claim on the firms assets.

d.

Debt assets such as bonds and loans are lower risk investments than shares

e.

Firms' past realised debt returns are usually higher than their past realised share returns.