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1. (TRUE or FALSE?) If a company is liquidated, creditors are paid in a priority order...

1. (TRUE or FALSE?) If a company is liquidated, creditors are paid in a priority order according to the structure of the firm's financial contracts and prevailing bankruptcy law?

2. (TRUE or FALSE?) Many people really believe that market prices of public securities reflect all available information because it is widely accepted that insiders have information that is always reflected in the security prices immediately, and therefore the concept of strong-form market efficiency represents the real case rather than the ideal world.

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Answer #1

1)

TRUE.  If a company is liquidated, creditors are paid in a priority order according to the structure of the firm's financial contracts and prevailing bankruptcy law. They have the first priority.

2)

FALSE.

Many people really believe that market prices of public securities reflect all available information because it is widely accepted that insiders have information that is always reflected in the security prices immediately, and therefore the concept of strong-form market efficiency represents the real case rather than the ideal world

This is not true in real life. If a person know he exploit it but id does not get reflected in the stock price.

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