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Please order the following securities according to its priority in its claims against a bankrupt firm....

Please order the following securities according to its priority in its claims against a bankrupt firm. The first listed should be the highest priority.

An Unsecured Bond

A Senior Debenture

Common stock  

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Answer #1

An Unsecured Bond

A senior debenture

Common stock

Senior unsecured corporate bonds are in most respects just like senior secured bones with one significant difference: There is no specific collateral guaranteeing them

After the senior securities are paid out, the junior, unsecured debt will next be paid out from what assets remain. This is unsecured debt, meaning no collateral exists to guarantee at least a portion. Bonds in this category are often referred to as debentures.

Common stockholders are paid last

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