Question
You are looking at a series of rated bonds and other investments and wonder what happens if a firm goes bankrupt. Which statement is most
You are looking at a series of rated bonds and other investments and wonder what happens if a firm goes bankrupt. Which statement is most true
a. BBB- and above is considered investment grade and in the event of a bankruptcy they get paid off ahead of bank debt.
b. A b rated bond is considered below investment grade or junk and if it is a debenture it will get paid off after bank debt and senior bonds in a bankruptcy.
c. An A rated bond is investment grade and gets paid off before any senior secured debit
d. In a bankruptcy, preferred stock gets paid off ahead of common stock and bonds get paid off before bank debt
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